A future between blockchain and stock markets? Well, there may be opportunities…
The role of blockchain is not only limited to cryptocurrencies. In fact, it is known to be able to maintain decentralized ledger for all transactions. This means that the technology can be integrated across exchanges in the world to speed up transaction settlements, through automation and decentralization.
Insights from the Organization for Economic Co-operation and Development (OECD), an intergovernmental organization, stated that stock exchanges globally and Asia have begun to blockchain-based efforts for clearing and settlement, after-trade and in security issuances. The Hong Kong Stock Exchange (HKEX) and the Australian Stock Exchange have reportedly entered into a partnership to work on an over-the-counter trading platform and upgrade their post-trade system. “I believe exchanges are one of the earliest adopters of blockchain technology in trading globally. Today, most of the premium and major exchanges around the world are adopting the utilization of distributed ledger technology (DLT) in pre- and post-trade activities, and also facilitate for investors in settlement of transactions,” Vani Majumdar, associate professor, KLH Global Business School, an educational institution, told FE Blockchain.
Market analysts expect that blockchain’s impact on the global stock exchanges such as the New York Stock Exchange (NYSE), Nasdaq, Bombay Stock Exchange, among others, could help reduce transaction costs to increase liquidity in the business landscape. According to the International Journal of Management, a quarterly peer-reviewed academic journal, digital stocks or equity tokens can be traded when exchanges remain closed due to being unlisted. Furthermore, stock symbols can help open avenues for trading in global markets that investors may not have access to.
“I believe blockchain’s influence in stock markets will mean a low operating cost, fraud-free, safe, faster (with Blockchain 3.0), a user-friendly stock market for the common man and an easy liquidity option for all participants. Stock markets can expect to save almost 70% percent of operating costs . The global market share of blockchain can be quickly propelled by Bitcoin and Ethereum,” said Ravindhar Vadapalli, professor of blockchain, analytics and finance at the Mittal School of Business, Lovely Professional University, an educational institution.
Reportedly, companies expected to inculcate blockchain-based stock trading practices include FedEx, International Business Machines (IBM), Walmart, Microsoft, Overstock, Mastercard, Oracle Corporation, Novartis, among others. As reported by ConsenSys, a blockchain software company, blockchain’s use in capital markets can help provide use cases such as issuance, stablecoins, security management, asset servicing, mutual fund management, among others.
“Money markets around share trading trade in products with very liquid short-term maturities (less than one year), and are characterized by a certain degree of security and low interest returns. At the wholesale level, money markets involve large volume trades between institutions and traders. At the retail level, they include money market funds purchased by individual investors and money market accounts opened by bank customers,” emphasized Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange.
Also read: SBF tried to destabilize the crypto market to save FTX
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