Ten stock and commodity exchanges explore blockchain technology

Baozou Shizhao Comment : The saying that "banks welcome blockchain" often makes people overlook the number of active companies in the field of blockchain technology. Many companies in different industries are actively exploring blockchain technology, and the most active ones include large stock and commodity exchanges. This article lists the top ten stock and commodity exchanges in the world, all of which have conducted large-scale technology exploration, but their respective focuses are different.

Translation: Annie_Xu

While we often hear “banks embrace blockchain,” this term often overlooks the breadth of financial institutions actively testing blockchain technology.

For example, the DTCC, a large clearing house in the United States, processes transactions worth hundreds of billions of dollars each year; Visa, the global credit card service system, is also one of the most prominent non-bank institutions to conduct pilot programs. Of course, some financial sectors are more active than others.

Large stock and commodity exchanges are also among the most active, investigating blockchain technology through investments and trials. For example, Nasdaq, the largest U.S. exchange operator, even released a blockchain prototype last fall.

The prototype, called Linq, trades and tracks shares of private companies and is seen as an early test of how blockchain could help large stock exchanges expand into new asset classes.

Ten stock and commodity exchanges have expressed interest in the technology, though they focus on different use cases.

Here is the complete list:

1. Australian Securities Exchange (ASX)

ASX is one of the most ambitious companies in the field of blockchain applications, having invested $10 million in blockchain startup Digital Asset Holdings in January.

In addition, ASX also revealed that it would explore beyond technical trials and build a new post-trade settlement system using a distributed ledger architecture, which would be specifically developed by Digital Asset Holdings.

But after January, the project was overshadowed by internal controversies within the agency. In March, Australian news media began to speculate that the future of the blockchain project was uncertain because the agency's CEO Elmer Funke Kupper resigned at this critical moment, although the ASX once again reiterated its importance to the experimental project.

There are also rumors that the ASX may not be as familiar with blockchain technology as it appears. For example, DTCC CEO Michael Bodson joked at a conference this month that about six months ago, most of the exchange's key leaders didn't even know the technology existed.

2. CME Group

CME is a founder of the Post-Trade Distributed Ledger Working Group and is active in the technology through its investment firm CME Ventures.

Unlike its peers, CME has adopted a diversified investment strategy, with investments including distributed ledger startup Ripple, blockchain investment group Digital Currency Group and Digital Asset Holdings.

This portfolio has a distinct cross-sector nature.

However, apart from this, CME did not announce more blockchain technology research directions and larger industry strategies.

3. Deutsche Börse

Deutsche Börse, operator of Germany’s Frankfurt Stock Exchange, participated in Digital Asset Holdings’ $60 million funding round in January.

Unlike the ASX, it has said little about its support for the technology.

In February, the exchange held a rare media meeting, stating that it was conducting multiple proof-of-concept studies on blockchain technology, but had yet to release the results or findings.

4. Dubai Multi Commodities Exchange

There has been little exploration of blockchain technology in the Middle East until recently, when the Global Blockchain Council revealed that a coalition of 32 startups, financial companies and technology giants had begun exploring blockchain technology and its impact.

One of the alliance members is the Dubai Multi Commodities Centre (DMCC), a special economic zone and commodities center that oversees precious metals and other tangible commodities.

In February, DMCC announced that it was partnering with bitcoin startup BitOasis to conduct a blockchain trial to explore how it could improve the customer acquisition process.

5. Japan Exchange Group

Japan Exchange Group (JPX), one of Asia’s most active stock market operators, announced its interest in blockchain technology in February, with news that it had become a user of IBM’s Blockchain-as-a-Service platform (BaaS).

At the same time, reports show that JPX has begun exploring a proof-of-concept mechanism to study how blockchain technology can create a new low-liquidity asset trading system, and is expected to release a related survey report by the end of this year.

Earlier this month, JPX announced a partnership with Nomura Research Institute (NRI) to explore the application of blockchain technology in the securities market.

6. Korea Stock Exchange

The Korea Securities Exchange, South Korea’s sole exchange, is also a recent entrant into the blockchain space. In February, it announced that it would develop a direct securities trading platform using blockchain in the future.

South Korean exchanges hope blockchain technology will help them cut costs, local news reports said.

7. London Stock Exchange

The London Stock Exchange (LSE), which is also one of the founders of the Post-Trade Distributed Ledger Working Group, has been the most active and quiet in blockchain technology trials.

The working group is the first to emerge after R3, and its creation shows that large financial companies can collaborate to conduct blockchain testing beyond the R3 collaboration framework.

Since then, a number of large financial companies have begun exploring private proof-of-concept mechanisms, while larger-scale tests have involved participants in capital market operations.

LSE, along with Kouvola Innovation and Japan Exchange Group, are among the first customers of IBM's blockchain-as-a-service platform.

8. Nasdaq

US stock market operator Nasdaq is perhaps the most advanced company in testing blockchain technology; it became the first financial institution to put a blockchain proof of concept into practice when it launched Linq, a private equity trading platform, in 2015. The platform is now in beta testing.

The announcement follows a series of important news, including the reveal of Nasdaq’s partnership with blockchain solutions provider Chain, and Nasdaq’s in-house experts also introducing blockchain technology knowledge to the public.

In 2016, Nasdaq continued this strong momentum and announced a blockchain test in partnership with Estonia’s Nasdaq OMX Tallinn Stock Exchange to apply blockchain technology to reduce barriers that prevent investors from participating in shareholder voting.

9. New York Stock Exchange

The New York Stock Exchange (NYSE) was one of the first companies to express interest in blockchain technology, making two announcements in 2015, both related to Bitcoin.

In January this year, NYSE invested in Bitcoin service company Coinbase. At the same time, NYSE Chairman Jeffrey Sprecher pointed out that this investment shows that they believe that millennials will actively use digital currencies. He said that this group of people has a more progressive view of value exchange.

The NYSE will continue to publish a Bitcoin Price Index to compete with Coindesk’s Bitcoin Price Index (BPI), and will obtain relevant data from transactions on the Coinbase exchange platform in May.

10. TMX Group

TMX Group, operator of the Toronto Stock Exchange, has also not disclosed its interest in blockchain.

However, the group first publicly expressed its desire to explore blockchain technology in March, and previously hired Ethereum co-founder Anthony Di Iorio as the project's chief digital officer. Since the next-generation network released a production model in March, the public has seen it as the most cutting-edge blockchain application.

However, TMX Group still stated that its blockchain technology strategy is still in its early stages of formation and may soon conduct technical tests.