The latest report from the World Federation of Exchanges on distributed ledger technology details the development of the technology in the industry market (download the full report)

The World Federation of Exchanges (WFE), the global trade organization for financial exchanges, has today released a new distributed ledger survey report (download the full report) highlighting the views of incumbent industry players on the technology.

Twenty-four companies, including exchanges, central securities depositories and central clearing counterparties, collectively known as “financial market infrastructures” or FMIs, participated in the survey.

Overall, 21 of the 25 participants in the survey said they are actively exploring applications of the technology. The companies that participated in the survey included Nasdaq, CME Group, Australian Securities Exchange, LCH.Clearnet and Japan Exchange Group, among others.

The report reflects much of what past reports have revealed, outlining how the industry market is exploring distributed ledger technology and developing proofs of concept, while also expressing concerns about regulation and cybersecurity.

The WFE report states:

“For the most part, financial market infrastructures (FMIs) are focusing on creating efficient processes and cost savings, however, some are also pursuing new service lines and revenue opportunities. Given the relatively early stages of this technology – particularly as it applies to capital markets – FMIs are unsure of the full capabilities of this technology.”

Furthermore, the survey highlights how the industry market is largely in favor of grouping together, for example, in particular the Hyperledger blockchain project and the Post-Transaction Distributed Ledger Group (PTDL).

Founded in the early 1960s, the WFE's membership includes more than 60 exchange service firms.

Report details industry progress

In addition to its broader implications, the report also details the current research and development (R&D) progress of distributed ledger technology in the market infrastructure sector.

For example, seven exchanges said in the survey that they have budgeted for this work, and another 13 said they are likely to do so.

The report also indicated that some survey participants envisioned a timeline of bringing a product to market within the next three years.

“While the majority of respondents were not ready with a specific time frame, 10 FMIs put their expected launch date within three years.”

Then, these players reportedly quickly tempered their expectations for the product launch.

According to the report:

“However, this time frame should not be interpreted as an endorsement of the viability of distributed ledger technology for the use cases under investigation. In light of the above, the FMI is still evaluating the capabilities of distributed ledger technology and identifying issues with the technology’s security, scalability, throughput and ability to protect data privacy.”