Overwhelming Majority of Stock Exchanges are Interested in Blockchain

It was just revealed that in July 2016, the World Federation of Exchanges (WFE), in collaboration with the International Organisation of Securities Committees (IOSCO), surveyed exchanges and post-trade infrastructures (Financial Market Infrastructures) regarding their use of and perspectives on Distributed Ledger Technology (DLT) Distributed Ledger Technology (DLT) A distributed ledger or distributed ledger technology (DLT) is a database that is shared and synchronized across a number of different devices in different locations. DLT networks effectively eliminate the need for a centralized authority to act as the network’s custodian. In its place is a Peer-to-Peer (P2P) network as consensus algorithms to ensure replication across nodes is undertaken.The most common kind of distributed ledger network is a blockchain network. Blockchain networks are used to A distributed ledger or distributed ledger technology (DLT) is a database that is shared and synchronized across a number of different devices in different locations. DLT networks effectively eliminate the need for a centralized authority to act as the network’s custodian. In its place is a Peer-to-Peer (P2P) network as consensus algorithms to ensure replication across nodes is undertaken.The most common kind of distributed ledger network is a blockchain network. Blockchain networks are used to Read this Term) or Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term.

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The results of the survey show that FMIs across developed and emerging markets and along various parts of the value chain are actively investigating the opportunities blockchain presents. In most cases FMIs are focusing on applications which aim to create process efficiencies and cost savings, though some are also pursuing new service lines and revenue opportunities.

The WFE found that FMIs are uncertain about the extent to which the technology will live up to its promise. They also highlighted several risks that need to be addressed such as risks of maintaining security standards across a decentralised database, legal and regulatory uncertainty, and concerns around scalability. At this point, FMIs favour collaborative engagement with regulators as the technology and its applicability to the capital markets industry evolves.

The overwhelming majority of FMIs who responded to the survey (21 out of 25 or 84%) indicated they were either investigating the applicability of distributed ledger technology to their environment or actively pursuing related initiatives (to the point in one instance of already having deployed a blockchain-based application). Of this set of positive respondents, seven replied they had gone as far as to allocate budget to their DLT initiatives. A further 13 FMIs who had not allocated budget as yet, said that they expected to do so in future.