Nasdaq Clearing exec: Blockchain activation will take small steps

Blockchain, first employed by the digital currency Bitcoin, has found potential uses in all kinds of industries and has been accepted as a valuable technology in the stock market as well. It has several improvements to offer to the financial systems, however its integration into the framework is not an easy task.

Gustaf Von Boisman, the head of product development of Nasdaq Clearing, clarified this gap at the London Blockchain Summit on the 31st of October. According to Boisman, modernizing the financial system with Blockchain is a time-consuming process and requires small steps. He said that the technology’s current capabilities are not necessarily leading to an immediate revolution.

Specific use cases are being focused on, instead of the entire financial system as a whole. For instance, Boisman explained that blockchain technology has the potential to reduce settlement times  to real-time speeds. In order for this to happen, it is mandatory to properly activate this technology within the system. This activation, however, could lead to several unwanted complications within the framework.

Boisman used several exchanges to illustrate his point, including the Riyadh-based Saudi Arabia Stock Exchange and the Moscow Stock Exchange, which is the largest exchange in Russia. Both of these companies used Blockchain technology and succeeded in reaching the coveted T+0 (same-day) settlement times. Due to factors such as the demand for international harmonization, they had to return to the traditional, slower settlement systems.

Boisman explained that now that the technology’s advantages have been proven, it is up to the market and the companies themselves to activate it within their frameworks. He said, “We're confident that the technology can do the job, and that comes back to how settlement can happen. It's more of a choice of market than a technological choice.”

As part of its Blockchain-related operations, Nasdaq Clearing has been working with several companies lately, including the Swedish bank, SEB; the Swiss stock exchange, SIX; and the advertising platform, NYIAX. The stock exchange company says that making big leaps is not the way to go in this process and firms should focus on simpler, short-term goals at first. Boisman concluded, "That's sort of the way we're looking at this, finding opportunities where we can look at the settlement of a particular use case and find what is the best for this particular implementation."