2017 or 2025? Securities companies discuss the timeline for regional blockchain development

Author: Velvet Gold Mine

Recently, an international securities trade group organized an industry forum in Boston to discuss the possibility of applying regional blockchain technology in the industry and how the technology will be applied in the industry.

A number of expert panels were brought together to discuss a number of issues, including how the securities trading industry should respond to the development of distributed ledgers and financial technologies.

The conference kicked off with important speeches by Paul Vigna, a reporter for the Wall Street Journal, and Michael Casey, a consultant for the MIT Media Studio. Casey and Vigna, authors of The Age of Cryptocurrency, outlined their views on the future growth of Bitcoin and regional blockchains, presenting their outlook on the opportunities and risks of this emerging technology.

However, the focus is on discussions on future applications of blockchain.

The discussion was moderated by DTCC’s Chief Technology Advisor and included a number of industry figures on the panel, including Chris Church, Chief Development Officer at Digital Asset Holdings; Todd McDonald, co-founder and COO of blockchain startup R3CEV; and Alistair Milne, Professor of Financial Economics at Loughborough University’s School of Business and Economics.

The main topics discussed included the initial development and scale of distributed ledgers that are expected to be achieved in the next one to two years.

During the discussion, Milne asked, "Will there be a big change in the securities market? I think there will be a big development in personal payments, but how it will be depends on the central bank."

Church said that the technological explosion is still a decade away, and he commented:

“If 2015 marked the beginning of blockchain, 2016 was the year people started to get to know it, 2017 will be the year of the first practical application, 2020 will see widespread acceptance of the technology, and by 2025 some markets will see a technological explosion. We are still ten years away from that.”

McDonald mentioned his company’s “divided ledger policy” for financial institutions and said 2016 will be a year of infrastructure, with big moves coming in 2017.

“You may not see any mergers or other big moves this year, but you will see a lot next year,” he said.

Industry Outlook

Obviously, many of the issues in the discussion were directed at two blockchain startups, R3CEV and Digital Asset, and involved their specific operational issues.
For example, Palatnick asked McDonald during the discussion what he thought of the recent industry move by 40 banks to simulate commercial lending through five blockchains.

He responded: “We did learn a few things, the main thing is we learned how to put a bank together. I think we said we wanted to make some important changes in the market, and this seems to be a small part from a technical perspective.”

During the discussion, Church pitched VirtualBill, an open-source blockchain proposed by the Linux Foundation and code designed by Digital Asset. He also talked up “fabric” — a word that came up more than once that day to describe the network of networks that are being pursued for blockchain technology applications.

“I would like to see virtual billing become a popular 'fabric' in the industry. There are a lot of great people working on virtual billing right now.”

Church went on to say that the technology, no matter what iteration it takes, will have a lasting impact on financial markets.

“It’s not going to revolutionize a market that’s been around for years;

Future applications

The discussion did not focus specifically on blockchain technology, but also included the topic of its application in the future securities trading market.

The discussion featured Vijay Mayadas, senior vice president of strategy and M&A at Broadridge Financial Solutions; Gene Mockler, senior business manager of Swift’s North America market infrastructure and initiatives team; Matthew Nelson, financial markets manager at SS&C Technology Group; and Dayle Scher, senior analyst at TABB Group.

Moitoso, whose company focuses on cloud-based financial services technology, revealed that the SS&C blockchain applications team has already developed early proof of concept applications targeting the securities industry.

“We have a team at SS&C that is working on blockchain technology. We recently solved the proof problem for securitized bank loans. It’s still early days and we’re continuing to refine it.”

Mayada said his company has long been a believer in blockchain, as evidenced by its participation in a recent $60 million fund raised by Digital Asset Holdings. He then discussed the chilling effect of Silk Road, the now-defunct dark market that used Bitcoin as a currency, as a manifestation of the financial market’s quest for technology.

“It’s still a mindset that needs to separate from these existing concepts, and it may take some time. I think it’s probably just part of it because we are dealing with a very complex industry.” He then described it as an industry controlled by many managers.

Mockler said Swift North America is working hard to advance its technology efforts and that the company still has a lot of issues to address, such as the limitations that have been raised by many financial experts, including some in the room.

"We are doing a lot of work within the industry. We develop our own technology in our labs. We have concerns and we also have issues, so to speak, that might be better, scalability, security and identity management."

He concluded: “There are still many problems waiting for us to solve.”

JPM compiled from

Coindesk, 2017 or 2025? Securities Firms Debate Timeline for Industry-Grade Blockchain, by Stan Higgins.