How can Blockchain impact capital markets?

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It is only a matter of time before Blockchain knocks at the door of the capital markets. Blockchain is touted as having the potential of delivering a variety of benefits to the capital markets industry, such as increased efficiency and speed in clearing and settlement, increased transparency and accessibility of records via a decentralised ledger that could redefine the need for a traditional central securities depository and a reduction of counterparty risk due to the minimal middle and back-office support required for the purpose of closing transactions and recording same on a ledger.

Access to the ledger (including the information on holdings, transactions and transfers recorded therein), as well as the distribution and exchange of securities, could be managed through smart contracts executed between investors and issuers of securities. This would enable the investor to have direct access to his/her portfolio of securities, potentially doing away with the need for holding custody accounts with financial intermediaries.

Some question whether Blockchain threatens to alter the role of, or even substitute, certain key players in the capital markets. Others are eager to understand what key features of Blockchain technology could facilitate dealings in the capital markets and how the potential benefits of these technological advances can be harnessed by the industry.

These, and other questions pertinent to Blockchain and its potential impact on capital markets, will be discussed at The Capital Markets Conference, organised by Camilleri Preziosi, to be held at the Corinthia Marina Hotel, St Julian’s, on November 3 between 2pm and 6pm (places may be reserved by sending an e-mail to [email protected]).

This article forms part of a weekly series called ‘Unravelling Blockchain’, contributed by Camilleri Preziosi Advocates, which explores Blockchain’s unique features and expands upon the technology’s legal implications across various commercial and corporate sectors.  For a more detailed commentary, visit www.camilleripreziosi.com.

 

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