Blockchain may be ready for primetime use on some of the world's largest stock exchanges, but that doesn't mean integrating the technology in financial systems will be an easy ride.
At the London Blockchain Summit on Oct. 31, Nasdaq Clearing's recently promoted head of product development, Gustaf von Boisman, addressed this gap, highlighting how the technology's current capabilities aren't necessarily leading to drastic restructuring. As such, the talk served to illustrate how major overhauls to the traditional financial system aren't what's being focused on, but instead very specific use cases.
For instance, in a notable example, von Boisman said that, while blockchains are capable of reducing settlement times down to real-time speeds, activating such a system within the framework of the financial industry could prove more complicated.
Von Boiseman pointed to several exchanges – including the Saudi Arabia Stock Exchange and the Moscow Stock Exchange – as companies that reached the coveted T+0 (same-day) settlement times with technology, only to return to slower settlements because of other drivers, for example demands for international harmonization and other market structure issues.
He told the audience:
"We're confident that the technology can do the job, and that comes back to how settlement can happen. It's more of a choice of market than a technological choice."
Nasdaq's current interest in blockchain includes work with advertising platform NYIAX, Swiss stock exchange SIX and – announced recently – Swedish bank SEB. To avoid market issues, though, von Boisman advocated that enterprises should look to break down the blockchain use cases that can modernize financial systems into smaller step goals.
"That's sort of the way we're looking at this, finding opportunities where we can look at the settlement of a particular use case and find what is the best for this particular implementation," Von Boisman concluded.
Correction: An earlier version of this story misinterpreted a Nasdaq executive's remarks about the progress and potential of blockchain technology. It also misparaphrased the reasons he gave why some stock exchanges have moved away from T+0 settlement times.
Nasdaq image via Shutterstock