[ad_1]
BLOCKCHAIN, THE the technology behind bitcoin and other cryptocurrencies has been designed with an ideological purpose: to evade central authorities and governments. But many people have been intrigued by its practical uses, such as the updating of back-office processes. And few institutions have shown more interest in such applications than in financial exchanges.
Although stock exchanges are often carried out in milliseconds by algorithms, their completion involves coordinating payment and delivery between a database mess and record reconciliation. In large financial centers, transactions take two whole days. Some stock exchanges are asking whether the distributed, tamper-proof registers of the blockchain and the recordings of immutable and transparent transactions can accelerate and simplify the process.
Exchanges from America and from Australia to Switzerland and Singapore are studying the concept. Stock Exchange of Australia, the ASX, moved further towards the use of blockchain to replace its main clearing and settlement platform. He is testing the technology from Digital Asset, an American company, and will go live in mid-2021. And November 11 SGX, The Singapore Stock Exchange and the Singapore Monetary Authority (MAS), its central bank, announced a prototype using blockchain for delivery, payment and settlement of assets.
These projects are surprisingly different from the vision of blockchain fans. ASXFor example, it uses registers but remains fairly centralized. A single counterpart, ASX itself, must approve the participants (which eliminates the need for verification and updating of energy-intensive records, as in the case of bitcoins). Although open to all, only some banks and brokers opt for direct access. All others must trade through them. In contrast to the complete transparency of the bitcoin register, market participants will not have access to the entire data set (for legal reasons, but also because they do not have to give up their positions). And the settlement will not be in real time.
Why, then, worry? Kelly Mathieson of Digital Asset says that the specific programming language of his company, DAML, which automates financial contracts, will further facilitate innovation. The tedious processes of reconciliation, she says, will be drastically simplified.
As soon as next year investors will be able to see the result of another smaller experiment. SIX, the owner of the Swiss stock exchange, will launch a separate digital platform for the trading of assets, such as stocks and bonds, in a "tokenised" form, ie in a format capable of handling blockchains. Tokenization will eliminate the minimum size of the exchanges, says Thomas Zeeb of SIX. It will also make a much wider range of tradable goods. Mr. Zeeb has already been approached by a museum that wants to highlight his art collection as a new source of funding. Investors would get exposure to the value of art by going up or down through such tokens, which they could trade.
All these projects have, or expect to get, an official blessing; after all, exchanges are highly regulated. But the Singapore project shows the value of seeking more than a nod of approval. MASHis involvement meant that the prototype was not limited to securities trading or regulation, but also looked at the digital currency issued by the central bank. A real change for a technology designed to evade governments.
