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The role of blockchain is not only restricted to cryptocurrencies. In fact, it is known for being able to maintain decentralised ledger for all transactions. What this means is that the technology can be integrated across stock exchanges in the world to in order to speed-up transaction settlements, through automation and decentralisation.

Insights from Organisation for Economic Co-operation and Development (OECD), an intergovernmental organisation, stated that stock exchanges globally and Asia have begun to blockchain-based trials for clearing and settlement, post trading, and in security issuances. Reportedly, Hong Kong Stock Exchange (HKEX) and Australian Stock Exchange have entered into a partnership to work on a platform for over the counter trading and upgradation of their post-trade system. “I believe stock exchanges are one amongst the early adopters of blockchain technology in trading globally. Today, most of the premium and major stock exchanges all over the world are taking the leverage of distributed ledger technology (DLT) in pre-trade and post-trade activities, and also facilitates investors in settlement of transactions,” Vani Majumdar, associate professor, KLH Global Business School, an education institution, told FE Blockchain.

Market analysts expect that blockchain’s impact on the global stock exchanges such as New York Stock Exchange (NYSE), Nasdaq, Bombay Stock Exchange, among others, can help decrease transaction costs to enhance liquidity in the business landscape. According to International Journal of Management, a quarterly peer-reviewed academic journal, digital stocks or equity tokens can be traded when stock exchanges remain closed due to them being unlisted. Further, equity tokens can help open avenues for trading in global markets to which investors might not have access to.

“I believe blockchain’s influence in stock markets will mean a low-operating cost, scam-free, safe, faster (with Blockchain 3.0), an user-friendly stock market for the common man, and an easy liquidity option for all the participants. Stock markets can expect to save nearly 70% percent of their operating cost. The global market share of blockchain can be fast propelled by Bitcoin and Ethereum,” Ravindhar Vadapalli, professor of  blockchain, analytics and finance at Mittal School of Business, Lovely Professional University, an educational institution, stated.

Reportedly, companies which are 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 utilisation in capital markets can help provide use cases such as issuance, stablecoins, collateral management, asset servicing, mutual fund administration, among others.

“Money markets around stock trading trade in products with highly liquid short-term maturities (less than one year), and are characterised by a degree of safety and low interest rate return. At the wholesale level, money markets involve large-volume trades between institutions and traders. At the retail level, they include money market mutual funds purchased by individual investors and money market accounts opened by bank customers,” Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, highlighted.

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