On December 9th, 2019 Standard Chartered Bank held a virtual conference exploring Digital Transformation in Financial Markets with prestigious industry experts. The conference was composed of 3 different online panel discussions:
We were honoured to participate in the panel on Blockchain applications in Capital Markets. The panel was moderated by Aaron Gwak, Managing Director, Head of Capital Markets, ASEAN Standard Chartered & Vinoy Kumar, Global Head Digital Assets, Standard Chartered.
How does blockchain technology improve bond issuance, execution, and servicing? The online panel featured Bitbond Founder & CEO, Radoslav Albrecht, alongside other professionals with comprehensive backgrounds in blockchain technology and finance. The discussion covered the functionalities of Blockchain & Distributed Ledger Technology (DLT) in capital markets, its adoption by financial institutions, and the regulatory landscape around blockchain based digital assets.
Watch the full video recording of the panel here
Here is a summary of what has been discussed:
The use of Blockchain and in particular distributed ledger technology (DLT) is expected to pick up in Capital Markets. DLT can solve many pain points depending on the use case. For certain market players, transparency and accurate live reporting of the asset’s performance is an important aspect that requires significant improvements. Other financial institutions see high costs and time consuming processes as a hefty burden on their efficiency and seek solutions to solve these pain points.
Blockchain technology and DLT, enables the development of solutions that can significantly improve inefficient processes across securities’ lifecycle. For instance, it can increase time to market of bonds (i.e reducing the issuance process from weeks to minutes) or provide all information concerning an asset and its performance from a single source.
It is also important to note that DLT allows the execution of these processes at a much more accessible and cost effective approach, therefore, providing institutions and issuers with the capacity to diversify their investor base and accept lower denomination investments.
Developing compliant blockchain solutions designated to the issuance, custody, and settlement of securities is a key aspect to ensure wider adoption of such SaaS solutions. Thus, the use of blockchain & DLT is expected to pick up in capital markets.
In order for the latter to be successful, regulatory and legislative changes will be required to accelerate the utilization of blockchain tech solutions by market players. The regulatory landscape is still lacking, however, we can already see governments taking initiatives to bring legal structure to financial instruments such as tokenized securities/security tokens.
Blockchain technology and DLT tackle capital markets across all parts of its value chain.
Different solutions can be utilized to make the process more efficient from issuance and execution of the bond to its servicing and trading.
Several countries are experimenting the use of central bank digital currency that would be operating on DLT. Its success could pave the way for more capital markets use cases.