More than 84% of trading venues and clearing counterparties surveyed by the World Federation of Exchanges (WFE) are either investigating or actively pursuing the applicability of distributed ledger technologies in financial markets.
WFE says that the poll of 24 members indicates that firms are at different stages of evolution in their DLT initiatives, with one having already deployed a DLT-based application, some at proof-of-concept, and others on the spectrum of evaluation, design, and proof-of-technology.
Clearing and settlement provided the most obvious use case for respondents, but with regulatory, legal and technical risks an issue there was little consensus on a viable time frame for live production.
Firms pinpointed a “lack of legal and regulatory clarity” as amongst the largest risks associated with the adoption of distributed ledgers in the capital markets. Other barriers to widespread uptake were lack of technical skills, vested interests in the preservation of the existing system, and uncertainty about the technology itself.
WFE chief Nandini Sukumar adopts a positive tone: “A powerful finding from our survey is the overwhelming number of FMIs who are already progressing work around DLT. This shows we are firmly moving towards a world where the technology could become applicable to global capital markets. DLT has been a key strategic focus for the WFE Post-Trade Working Group, and today’s research report is the first in a series of public material we will be issuing on the topic.”
The survey, conducted in July and August 2016 jointly by the WFE and regulatory body Iosco will feed into into broader research by the watchdog into financial technologies and their application in capital markets which is set to be published later in the year.
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