Nasdaq is claiming a major step forward in the use of blockchain technology in capital markets after documenting a successful private securities transaction via its distributed ledger-based Linq platform.
Exchange operator Nasdaq outlined plans last year to tap the Open Assets Protocol colored coin initiative to create blockchain-enabled digital ledger technology at its Nasdaq Private Market platform, which is used by private companies for pre-IPO trading.
The first proof of concept transaction was symbolically recorded on New Year's eve by Chain.com, the blockchain development company that is helping Nasdaq to build the platform. For this transaction, Chain digitally represented a record of ownership using Nasdaq Linq, cutting back on settlement time and eliminating the need for paper stock certificates.
In addition to its equity management function, Nasdaq Linq also provides issuers and investors an ability to complete and execute subscription documents online.
While this application took place in the private markets, Nasdaq believes the technology holds the promise for expediting trade settlement for transactions in public markets.
"We believe this successful transaction marks a major advance in the global financial sector and represents a seminal moment in the application of blockchain technology," says Bob Greifeld, CEO, Nasdaq. "Through this initial application of blockchain technology, we begin a process that could revolutionise the core of capital markets infrastructure systems. The implications for settlement and outdated administrative functions are profound."
Nasdaq is not the first to apply the technology to capital markets trading, with Overstock, Symbiont and Digital Asset Holdings all conducting experimental trials over the past year.
Nasdaq is hoping to use distributed ledger technology for a host of other tasks, and recently revealed that it is working on a way to manage proxy voting via blockchain technology in Estonia.