The Swift Institute is offering up a EUR15,000 grant for research into the development of blockchain technology for use in securities markets.
Although primarily associated with bitcoin, the blockchain is increasingly being eyed by players in the securities markets. BNP Paribas research analyst Johann Palychata recently claimed that the distributed ledger could cause "total disruption" to the post-trade infrastructure, while Nasdaq OMX and UBS are both exploring its potential.
While the blockchain's ability to provide fast, irrevocable and transparent clearing and settlement may prove attractive, financial messaging body Swift notes several concerns about the technology.
The Swift Institute is asking researchers to apply for a grant to look into some of these areas and come up with answers to the following questions:
- What would the securities transaction lifecycle look like on the blockchain compared to today? What is the optimal design of a system based on distributed ledger and blockchain to cover securities lifestyle processing? Would it replicate the settlement instruction lifecycle, or eliminate some of the steps along the way? Would real-time delivery versus payment be achieved?
- What would be the impact on the current range of intermediaries in the securities transaction lifecycle?
- Where are the opportunities for other kinds of participants to become part of the securities transactions lifecycle if using blockchain?
- What are the implications of having one part of the transaction lifecycle on blockchain (such as settlement), whilst others may not be on blockchain (e.g. trade execution)?
- What are the cost and risk implications of securities transactions on blockchain? Does risk increase or decrease? How are costs impacted? Who will bear the cost of establishing a global blockchain environment for the securities industry, and who will benefit from any resulting cost savings?
- What technology requirements need to be in place for global securities transaction processing using blockchain? How does this compare to what exists today?
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