Several prominent exchanges, trading firms and banks have come together to set up a blockchain-based settlement group that could significantly transition the current securities market in the way of settling securities trades.
A group comprising of the London Stock Exchange, UBS, the CME Group, Societe Generale, LCH.Clearnet and Euroclear have formed an initiative to look into the possibilities of bringing blockchain technology to securities trading.
As reported by the Financial News, sources familiar with the group have confirmed three meetings that have already taken place in recent months. A steering committee has also been formed to help with the process, the publication added.
The group is currently operating under the working title ‘Post Trade Distributed Ledger Working Group,’ with the focus currently on the application of blockchain technology in supporting post-trade processes.
A London Stock Exchange spokesman toldFinancial News:
Our view is the technology needs to be developed in a considered and rigorous manner, in partnership with clients, to provide the right service and benefit to them. Given our long experience in post-trade, our group has significant technical expertise to bring to the discussion.
The London Stock Exchange Group also played host to the first meeting, while the spokesman shared the company’s belief in seeing blockchain technology to usher change in the capital markets industry. More specifically in both “pre- and post-trade,” with risk management seen to benefit immediately due to the tamper-proof system that blockchain brings.
The current clearing mechanism, which may soon turn into a legacy system if blockchain had its way sees stock trades take two days to be settled during a transfer. A blockchain settlement system is likely to facilitate trades in a matter of minutes.
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