Out of many application of Blockchain that has come to light, one of the most promising application is data security and implementation of a distributed consensus to ensure transparency. Therefore, it finds its use significantly in the execution and settlement of financial securities like equities, bonds and commodity stocks on Stock and Commodities Exchanges.
An automated distributed system would deter all kinds of corruption and malpractices. It would also enable investments in a broader range of financial instruments which were earlier limited by the centralized agencies issuing the security like Government bonds.
Reportedly, the London Stock Exchange is testing the issuance, admission, and trading of equities with Nivaura. Nivaura is London-based Fintech start-up that develops products for issuance and settlement of securities on Financial platforms. Nikhil Rathi, the CEO of London Stock Exchange (LSE) told CNBC,
“You can certainly see distributed ledger technology having an application in the issuance process,” He added “I can see that technology being used in settlement too.”
The LSE is reportedly working very closely on delivering financial securities on the blockchain. These are classified as Security Token Offerings (STO) because their price and supply are backed by actual financial security.
Furthermore, other significant developments in traditional Exchange through the implementation of Blockchain and cryptocurrency has been witnessed at Switzerland-based SIX Exchange.
SIX Exchange has worked closely with Germany-based Amun AG in releasing Exchange-traded products based on Bitcoin and other cryptocurrencies. Reportedly, SIX is also looking to launch a new Exchange based on a Blockchain platform to accelerate the entire process.
On adding cryptocurrencies and Bitcoin as security itself on the Exchange, Rathi mentioned citied that “extreme manifestations” in the crypto space were cause for “a little bit of caution.”
Blockchain and AI together are disrupting the FinTech industry now that it’s seeping to Stock Exchanges as well. Which other countries will support the transformation?