ODAILY China: Will blockchain transform the stock market?

Blockchain can make it easier to transfer property rights and other assets by reducing transactional costs and boosting trust between investors. But can it be used by the world’s largest stock exchanges?

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blog Norbert Biedrzycki blockchain

Reprintint and translation of my article titled “Will blockchain transform the stock market?” to chinese at ODAILY China (link), from Data Driven Investor (link). Below you will find english version of this article as well.

编者按:本文编译自 Data Driver Investor 报道,原文作者:Norbert Biedrzycki,是微软服务CEE(Microsoft Central Eastern Europe·中东欧)主管,前麦肯锡数字副总裁、前甲骨文咨询和业务发展服务部门的负责人。

通过减少交易成本和增强投资者之间的信任,区块链可以使产权和其他资产的转移变得更加容易。但它有机会被世界上最大的证券交易所使用吗?

在过去的两三个世纪里,金融资产交易的管理规则几乎没有改变。有人说,这些规定相对来说运行得不错(除了偶尔发生几次震惊世界的危机之外)。那么它需要改变吗?它应该改变吗?它能改变吗?

我相信它需要、应该、也能改变。我们如何让董事会、投资者、卖家、买家、中介机构以及监管机构接受新规则呢?假设改变是必要的,区块链会是传统股市改变的主要步骤吗?

并不完美的传统交易所

今天的投资者依赖于传统买卖和会计系统,这些系统已经太古老了,甚至可以称之为僵化。这些系统产生了大量的成本,同时也延长了关闭交易的时间。这是因为金融资产交易需要多个企业实体在一张复杂网络中安排,这张网包括了中介机构、结算系统和商业伙伴在内。

无论是投资者、经纪商、保管人、证券交易所管理层还是中央监管机构,所有参与资产交易(也就是买卖交易)的行为人都有义务产生信息、接受授权并不断的更新交易身份记录。

现在,区块链可以改变这一切。通过使用区块链的分布式账本,可以快速处理关键的交易相关过程,比如发行证券,交易,清算和结算,同时无需太多的摩擦。

冲击来了

还有一个因素需要考虑:信任,即投资者愿意相信和信任支撑证券交易系统的一般规则。

2008 年的金融危机(在一定程度上)是由不透明的金融工具泛滥引发的,这让人们对现有全球模式的透明度产生了疑问,我们十年前经历的这次崩溃暴露了寻找替代解决方案的必要性,这将有助于建立一个更加透明、防篡改的系统。

事故发生后出现了新的政府法规,而今天在美国,这些法规正在被“回滚”。Odaily星球日报注:2007-09年金融危机之后,美国奥巴马政府出台了《多德弗兰克法案》,用于监管银行业,该法案被认为是大萧条以来最全面、最严厉的金融改革法案;20185月,美国国会众议院以258-159票批准「关于改革2010年多德弗兰克法案」的S.2155号议案。)

而区块链是无法回滚的。

区块链

考虑到其特点,我认为区块链能够给证券交易市场的未来带来希望。

在基于区块链的交易所中,黑盒交易将成为过去式。智能合约能够消除关于交易是否正确执行的疑虑,我们将不再需要今天不可或缺但效率低下的监管机制。

举个例子,纳斯达克管理层已经关注区块链三年了。早在2015 年5 月,就推出了私人股票交易平台Linq ,旨在让非上市公司能够以数字方式发行自己的股票。去年,纳斯达克斯德哥尔摩和瑞典银行SEB 开始测试使用区块链来实时登记所有交易,这一基于区块链的解决方案已经在纳斯达克塔林交易所经历了严格的测试。该项目的前提是,公司股东将能够在投资者会议期间投票,或通过数字方式将其投票权转让给代理人。

伦敦证券交易所集团(The London Stock Exchange Group· LSEG)合作IBM,已经开始测试一个基于区块链的平台,旨在使中小企业股票的交易完全数字化,试验由LSEG 的意大利运营商Borsa Italiana 进行。

澳大利亚证券交易所(Australian Securities Exchange) 也计划今年完成为期两年的程序,开发一个能够提高运营透明度和增强投资者安全的系统。

区块链变成生活中的一部分的一个显著例子是“特拉华倡议”。2017 年,特拉华州,以上市公司高度集中(以及对企业的规定和税收十分友好)而出名,法律承认区块链作为一个官方解决系统存在。目前州机构正在制定一个系统,该系统将允许企业产生、存储任何公司相关的数据。

不过,在特拉华州为区块链游说的人注意到证券市场的复杂性,他们尤其关心追踪股份所有权的挑战。项目推广者说,区块链是一个很好的解决方案,将使更容易验证股份所有权和大大减少交易时间成为可能。

这既不是幻想,也不是炒作,这种情况正在发生。

区块链的未来如何开花?

首先,金融机构必须确保其客户的资金是安全的。因此,即使已经有相关的例子,也毫不奇怪资本市场拥抱区块链的速度仍然是缓慢的。要看到真正的进展,必须满足某些条件,其中首要条件是为区块系统建立最严格的安全标准。区块链的实现需要合适的法律,不幸的是,目前各地的立法环境都有些两极分化和前后不一。

我们还必须牢记,技术仍然是有限的,提高生产能力和降低交易成本的工作正在进行中。在纽约证券交易所,一个正常交易日约有30 亿笔交易,开发新的平台来处理这样的数据量可能会是复杂和耗时的,这就转化成了成本。

不过,我相信金融市场将会看到区块链最重要的落地,它们将成为其他领域的训练场。

本文翻译自https://www.datadriveninvestor.com/2019/04/09/will-blockchain-transform-the-stock-market/。如若转载请注明出处。

English version:

Blockchain can make it easier to transfer property rights and other assets by reducing transactional costs and boosting trust between investors. But can it be used by the world’s largest stock exchanges?

The rules that govern trades in financial assets have changed little over the past two or three centuries. Some say those rules have worked relatively well (apart from a few world-shattering crashes now and then). Does it need to change? Should it change? Can it change?

I believe it needs to, should, and can. What can we do to convince boards, investors, sellers, buyers, intermediaries and supervisory bodies to adopt new solutions? Assuming change is feasible, will blockchain be a major step toward doing away with traditional stock exchanges?

That not-so-good old-timey exchange

Today’s investor relies on a traditional system of buying, selling and accounting for transactions that’s old enough to be called ossified. The system generates considerable costs and adds to the time needed to close transactions. This is because trading in financial assets requires multiple entities arranged in a complex web of intermediaries, settlement systems and business partners. Whether they are investors, brokers, depositaries, stock exchange management or central supervisory bodies, all actors taking part in asset trading – buying, selling, or transferring – are obliged to generate messages, receive authorizations, and continuously update transaction status records. 

Blockchain can change all this. Key transaction-related processes such as issuing securities, trading, clearing and settlements could be handled swiftly and without much friction with the use of blockchain’s distributed ledger.

And then came the crash

There is another factor to consider: trust, the willingness of investors to believe and have faith in the general rules underpinning the stock exchange system.

The fiscal crisis of 2008, triggered (in part) by the proliferation of opaque financial instruments, called into question the transparency of the existing global model. The crash we experienced a decade ago laid bare the need to search for alternative solutions that would help build a more transparent, tamper-proof system. What emerged in the wake of the crash were new government regulations that today, in the U.S., are being rolled back.

Blockchain cannot be rolled back.

Given its properties, I think that blockchain would give us hope for a stock exchange of the future. In a blockchain-based exchange, murky transactions would become a thing of the past. Smart contracts could dispel doubts as to whether settlements have been made correctly. Supervisory mechanisms – today indispensable, albeit inefficient – would no longer be needed.

Trust would be a given.

Blockchain hits the largest trading floors

The investment market is on the cutting edge of early blockchain deployments.

For instance, Nasdaq management has been looking at blockchain for three years. As early as May 2015, the private share-trading platform, Linq, was launched to enable unlisted companies to represent their shares digitally. Last year, Nasdaq Stockholm and the Swedish bank SEB started testing the use of blockchain to register all transactions in real time. Blockchain-based solutions have undergone rigorous testing on the Nasdaq Tallinn exchange. The premise of the project is that corporate shareholders would be able to vote during investor meetings or digitally transfer their voting rights to a proxy. 

The London Stock Exchange Group, in cooperation with IBM, has begun testing a blockchain-based platform to fully digitalize trades in the shares of small and medium-sized enterprises. The tests are being carried out by the Italian operator of LSEG, Borsa Italiana. And the Australian Securities Exchange plans to finish its two-year-long process this year to develop a system that will increase operations transparency and enhance investor security.

One remarkable example of how blockchain can become a fact of life is the “Delaware Initiative.” In 2017, Delaware, known for its high concentration of listed companies (and business-friendly regulations and taxes), legally recognized blockchain as an official settlement system. State authorities are now setting up a system that will allow businesses to generate and store any company-related data. People who lobbied for blockchain in Delaware noted the complex nature of the securities market. They were particularly concerned about the challenge of tracking share ownership. The project’s promoters said that blockchain is a good solution that will make it possible to more easily verify share ownership and considerably reduce transaction times.

This is neither fantasy nor hype. This is happening now.

How the blockchain future will flower

Financial institutions must, above all, be certain that their customers’ money is secure. It is therefore unsurprising that even given the examples related, capital markets are still slow to embrace blockchain. To see genuine progress, certain conditions must be met, primary among them the establishment of the most stringent security standards for the block system. Blockchain implementations require proper laws. Unfortunately, right now, the legislative environment everywhere is somewhat polarized and inconsistent. 

We must also bear in mind that the technology continues to be limited. Work is underway to boost its capacity and reduce transaction costs. On the New York Stock Exchange, there are around three billion trades on a normal day. The development of new platforms to handle such volume is likely to prove complicated and time consuming. And that translates into costs. 

Nevertheless, I believe that financial markets will see the most important implementations of blockchain. They will become the training ground for other sectors. 

Norbert’s blog

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Works cited

New York Time, Alan Rappeport and Emily Flitter, Congress Approves First Big Dodd-Frank Rollback, link, 2018. 

NASDAQ.com News, Nasdaq and Citi Announce Pioneering Blockchain and Global Banking Integration, link, 2017. 

The Wall Street Journal, Markets Diary: Closing Snapshot, link, 2018. 

Forbes, My Say, Why The Delaware Blockchain Initiative Matters To All Dealmakers, link, 2018. 

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– Blockchain poised to shake up our lives

– Will quantum computers doom the blockchain?

– Robots awaiting judges

– Why do we care about blockchain technology?

– Blockchain – the ultimate financial crash

– Blockchain – the Holy Grail of the financial system?

Leave a Reply

5 comments

  1. TomK

    Blockchain is a specialized trick for coinz and really doesn’t have any outside applications other that something in the trading industry for that purpose.
    As soon as you start trying to “look outside the box” with coinz, you realize blockchain size will always be your ball’n chain and the only way to mitigate, is to put a head on to the chicken.
    Now you have zero need for the blockchain.

  2. And99rew

    Nice. I think I have seen this article w week ago already at another tech portal. All the best