London Stock Exchange, Societe Generale and other financial giants jointly established a blockchain group

According to the Wall Street Journal, some of the world's largest exchanges, banks and trading services companies have joined together to form a cross-industry group to explore how blockchain technology can change the way securities trades are cleared and settled.

The discussions involve the London Stock Exchange, London Clearing House, Societe Generale, CME Group, UBS and Euroclear, and the group has appointed a steering committee, according to people familiar with the matter.

The group, tentatively named the Post-Trade Distributed Ledger Working Group, is exploring how blockchain can be used to run post-trade processes. The group has met three times in the past few months.

Currently, the most prominent application of blockchain is bitcoin, but almost all major financial players believe that blockchain can create an open, tamper-proof transaction ledger that could one day replace and simplify many of the complex systems used in securities trading.

Any type of financial asset, such as bonds or stocks, can be converted into a code and transmitted through the blockchain without the need for a clearing house. This means that the clearing and settlement process of stock transactions may be completed in a few minutes instead of two days.

In September, 25 major banks, including JPMorgan Chase, Morgan Stanley, Credit Suisse, Bank of America, Societe Generale and UBS, backed a New York startup, R3, which aims to develop blockchain standards and protocols to drive greater adoption of the distributed ledger technology in the financial industry.

The newly formed group is different from R3’s blockchain group because it will have a broader membership, according to a person familiar with the matter.

“We believe that using this exciting new technology to drive innovation and develop new products will significantly reduce risk and margin requirements, while providing opportunities for deeper regulation,” said Moiz Kohari, head of technology innovation at the London Stock Exchange.

Other financial institutions keen to explore blockchain technology include Nasdaq Group, whose CEO Bob Greifeld announced in October that the exchange would use blockchain to better manage and optimize the proxy voting process for European exchanges.

Earlier in 2015, Nasdaq also established a partnership with Chain, a San Francisco-based blockchain startup, hoping to use blockchain technology in its private equity trading market.

UBS is also very active in this field. In April this year, UBS established an innovation lab in London to explore blockchain applications.

Original text: https://city.wsj.com/stories/2d8a566d-c48c-433f-964a-4e7f94485533.html
By Peter Rugg
Compiled by: Satuoxi
Editor: Satuoxi
Source (translation): Babbitt Information