A pair of central securities depositories (CSDs) are tackling the threat posed to their industry by the blockchain frenzy head on, forming a partnership to explore how they can make the most of distributed ledger technology.
South Africa’s Strate and Russia’s NSD have inked a letter of intent on the issue at this year’s Sibos, vowing to develop tools that use DLT, with the first use case focused on proxy voting.
Blockchain technology has long been viewed as a threat to CSDs and their role as intermediaries for securities transactions. With this in mind, the partners say that “financial market infrastructures need to embrace the technology and identify opportunities that will add value to their current clients”.
They are hoping that their partnership will be the beginning of an industry-wide collaboration, claiming that several other CSDs have expressed interest in joining them.
Strate and NSD will share information regarding standards, regulations and DLT technologies; explore mutually beneficial ideas; and look to make savings through the sharing of technology and development costs.
Eddie Astanin, chairman, executive board, NSD, says: “We believe that the securities settlement and custody industry is one of the promising sectors where we can use new technologies. I think that post-trading may become the starting point of transition of the distributed ledger technology and blockchain from theory to practice.”