Using distributed ledger technology (DLT) in securities markets could create savings north of $100 billion per year, a report produced by a major traditional-finance lobby group has said.
In a report published Tuesday evening, the Global Financial Markets Association (GFMA) called for regulators to allow the technology that underpins crypto to aid collateral management, asset tokenization and sovereign bond markets.
“Distributed ledger technology holds promise for driving growth and innovation,” said Adam Farkas, Chief Executive of GFMA, whose affiliates in the U.S., Europe and Asia count major players such as JPMorgan Chase, HSBC and Nomura among their members.
“This potential should not be ignored or prohibited where regulatory oversight and resiliency measures already exist,” Farkas added, calling for a harmonized international framework to let DLT-based markets link up.
Freeing up collateral outstanding in areas like derivatives and securities lending could save over $100 billion per year in financial resources from a market worth some $19 trillion, and using smart contracts to automate settlement and corporate action processes for stock splits and mergers could mean $15-20 billion lower operational costs, the report said.
The study reflects growing enthusiasm for using DLT from traditional finance players.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.