Major Global Exchanges Increase Researching, Deploying Blockchain, Poll Says

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The number of Financial Market Infrastructures (FMIs) which are investigating and deploying Blockchain increases, concludes a new poll by the World Federation of Exchanges(WFE).

The report is based on responses from 24 FMIs, which are a combination of exchanges, central counterparties and central securities depositories.

They include the Group Deutsche Börse, Japan Exchange Group, Moscow Exchange Group, Nasdaq and the National Stock Exchange of India. Others are SIX Swiss Exchange, China Financial Future Exchange, Hong Kong Exchanges & Clearing Co. Ltd, Johannesburg Stock Exchange, Tadawul – Saudi Stock Exchange and BM&FBOVESPA.

21 out of 25 exchanges apply Distributed Ledger Technology

The exchanges also, more often than in the past, apply Distributed Ledger Technology (DLT) proof-of-concepts and solutions. 21/25 respondents indicated they were either investigating the applicability of DLT to their environment or actively pursuing DLT initiatives.

Of these positive respondents, one has already deployed a DLT-based application, seven say they had allocated a budget to their DLT initiatives while 13 others say they expect to allocate a budget in future.

While some are working independently on their own initiatives, other FMIs are participating in industry groups such as the Linux Foundation Hyperledger Project and the Post-Trade Distributed Ledger Group.

Cases for DLT

Potential use cases for DLT being explored by the FMIs include clearing and settlement in the securities industry; trade matching and confirmation for relatively lower volume assets such as fixed income, OTC derivatives, the repo market and the private securities market;
corporate actions (voting rights and dividend payments); crowd-funding; trade registration; and regulatory reporting and transparency.

They highlighted cost savings, efficiency enhancement and risk reduction as their main reasons for investigating the application of DLT to the use cases and some noted the possible revenue opportunities their DLT investments could unlock through providing access to new product and service offerings.

The majority of respondents believed it was not only possible for non-financial players to take the lead in the development of DLT, but likely, given these firms would tend to be less
regulated than financial services firms.

Adoption on the increase

The current collaborative approach is likely to persist as FMIs, technology innovators and market participants acknowledge that many of the more significant benefits of DLT will derive from standardisation and broad user acceptance.

This collaboration should also extend to policy-makers and regulators so as to both
encourage the adoption of appropriate enabling regulation and to minimise unintended
consequences of policy formation.

The WFE, which is the leading global trade association for FMIs whose membership spans the full continuum of FMIs across asset class and size, says it will devote significant time and attention to forging consensus amongst its members on DLT-related issues, specifically formulating guidelines, codes of conduct and industry best practices, as use cases and issues emerge.