Market analysts believe that the impact of blockchain on global stock exchanges such as the New York Stock Exchange can help in decreasing transaction costs to enhance liquidity in the business landscape.
It is important to note that the role of blockchain is not only restricted to cryptocurrencies. In fact, it is known for being able to maintain a decentralized ledger for all transactions. What this particularly means is that the technology can be incorporated across stock exchanges in the world to speed-up transaction settlements, through automation and decentralization.
Insights from Organisation for Economic Co-operation and Development (OECD), an intergovernmental organization, reported that stock exchanges globally and in Asia have started implementing blockchain for clearing and settlement, post-trading, and in security issues. It has been reported that Hong Kong Stock Exchange (HKEX) and the Australian Stock Exchange have partnered up to work on a platform for over-the-counter trading and the upgradation of their post-trade system.
Vani Majumdar, associate professor, at KLH Global Business School, an education institution, told FE Blockchain that she believes stock exchanges are one of the early adopters of blockchain technology in trading globally. According to her, Today, most of the premium and major stock exchanges around the world are leveraging Distributed Ledger Technology (DLT) in pre-trade and post-trade operations and assisting investors in settling transactions.
Market analysts believe that the impact of blockchain on global stock exchanges such as the New York Stock Exchange (NYSE), Nasdaq, and Bombay Stock Exchange, among others, can help in decreasing transaction costs to enhance 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 stock exchanges stay closed due to them being unlisted. Furthermore, the equity tokens can help in opening avenues for trading in global markets to which investors might not have any access.
Ravindhar Vadapalli, professor of blockchain, analytics, and finance at Mittal School of Business, Lovely Professional University, a renowned educational institution has stated that she believes the influence of blockchain in stock markets will signify a low-operating cost, scam-free, safe, faster (with Blockchain 3.0), a user-friendly stock market for the common people. According to her, this will also mean all participants will have an easy liquidity option. Stock markets can hope to save almost 70% percent of their operating cost. She concluded by saying that the global market share of blockchain can be quickly driven by Bitcoin and Ethereum.
According to the reports, companies expected to incorporate blockchain-based stock trading practices include FedEx, International Business Machines (IBM), Walmart, Microsoft, Overstock, MasterCard, Oracle Corporation, and Novartis, among others. According to a report by ConsenSys, a blockchain software company, the use of blockchain in capital markets can help in the use of issues, stablecoins, collateral management, asset servicing, mutual fund administration, etc.
When asked about this, Sathvik Vishwanath, co-founder and CEO of Unocoin, a cryptocurrency exchange stated that money markets around stock trading trade in highly liquid short-term maturity (less than one year) products, and are characterized by a degree of safety and low-interest rates of return. According to him, at the wholesale level, money markets generally include large-volume trades between institutions and traders. At the retail level, they involve money market mutual funds bought by individual investors and money market accounts opened by bank customers.
Courtesy: Financial Express