In recent years, blockchain technology is a dazzling star in the field of financial technology. It uses cryptography, shared-net-sharing books, and distributed consensus mechanisms as its core technology to build a set of core institutions that do not rely on any specific third-party institutions. Operating distributed ledger system. Yu Wenbo, the chief researcher of the first blockchain graduate student blockchain researcher in China, said that it has the potential to change the entire financial industry's infrastructure and thus has a profound impact on the industry as a whole.
On the sharing activities of titanium media, Yu Wenbo made a related sharing on the impact of blockchain technology on the securities industry:
The Consensus of Application of Blockchain Technology in the Securities IndustryThe application of blockchain technology in the securities industry should be mainly focused on all aspects of the post-transaction flow. This technology can reduce the cost of post-transaction links, reduce risks, and even some people think that he can make settlement after securities transactions. Shorten settlement time and more.
Blockchain technology is used to solve some problems in the settlement process after securities trading. It is because the efficiency of the existing securities trading process is rather low. The reason for the low efficiency is that both parties must maintain their own transaction records and must Fulfilling the resulting counterparty relationship results in the counterparty investing a lot of unnecessary resources to verify the data at each stage of contract execution. Therefore, the sharing of distributed ledgers has attracted the attention of relevant parties. It is believed that it may be able to store all trade execution-related transaction information in a form that is recognized and authenticated by all and thus shared with all participants. .
Some organizations have made a rough estimate of the cost of the post-trade settlement process in the securities industry. For example, Morgan Stanley estimated that the global post-transaction cost alone would be as high as US$25 billion, and this is not the entire transaction. All the costs of the link - if you add up all the related costs of the post-transaction link, it may reach more than 100 billion US dollars. This is a huge cost. We think that if you use blockchain technology to transform the post-transaction process, you can save at least 50% of the cost of the post-transaction process.
So far, the entire securities industry believes that there are at least several basic judgments about the use of blockchain technology in the securities industry.
First of all, if you apply blockchain technology to the securities industry, this must be a blockchain such as private chains, not a public chain.
The second is that if the blockchain technology is to be pushed into the securities industry, it must go through a phase of gradual advancement , that is, it may be used first in some centralized safety depository to handle records. Ownership of some scenarios. For example, we often mention what sort of syndicated loan transactions, buybacks, securities lending, etc.
In the third aspect, the current understanding is that if blockchain technology is to be applied to the securities industry, it will certainly involve a complete transformation of the existing post-transaction settlement process—the reengineering of processes .
Only by doing this three points should it be said that blockchain technology has obtained a relatively common application in the securities industry.
When the new technology is popularized and applied, everyone's attitude is often divided into two extremes. One thinks that the new technology will overturn everything, and the other thinks that the application of new technologies may encounter many obstacles, but more Start with reality. Now it seems that a more pragmatic attitude should be that we all rely on each other in the middle. To use a phrase that people often say is: The use of blockchain technology in the securities industry should have a bright future, and the road should be very tortuous.
Blockchain Application in the Securities Industry: Considering Demand Ratios Considering Technical ImportanceIn this way, I would like to say that I will talk about the good future first. Because so far, everyone is convinced that blockchain technology will fundamentally change the process of financial market operations. There are even many people who are trying to follow this line of thought.
So the use of blockchain technology in the securities industry shows two extremes:
One is starting from technology and appearing as the face of subversives, trying to restructure the securities industry's infrastructure. This typical representative is the various types of decentralized exchanges that have emerged so far.
The other is that traditional securities industry institutions proceed from the existing business and regulatory environment and use blockchain technology to enhance the functionality and efficiency of existing systems.
For example, Linq, a trading platform for the private equity market launched by NASDAQ based on blockchain technology. Linq is a platform for private companies to issue creditors and conduct securities transactions. Through Linq, both parties to the transaction can complete the issuance and purchase of shares online, and the use of decentralized books can realize the trading of shares without any third-party intermediary and clearing institutions. Nasdaq’s CEO believes that
Through the use of blockchain technology, it is very likely that a brand-new process will be initiated. This process will completely change the infrastructure and systems of the entire capital market, because the blockchain technology will change the existing capital market infrastructure system. This is because the core of the existing capital market infrastructure that is changed by blockchain technology is the settlement of transactions and all administrative approvals.
The other is Overstock, a US listed company whose blockchain platform is called "tØ.com." Another online retail shopper in Utah, USA, developed blockchain-based software in 15 years. A securities trading platform, of course, he uses colored currency technology to build a mechanism that allows the use of a small bitcoin to track asset ownership. This technology will be performed on the Bitcoin block, and all its technology is built on distributed encryption protected books. Anyone can access and review this book to ensure the fairness of the entire market.
In order to show people his system, the CEO also purchased $500,000 self-issued bonds in June of the same year. In the following month, he also sold $5 million in cryptographic bonds to other investors. One very interesting thing is that in mid-December of last year, the United States Securities and Exchange Commission approved the company to issue shares of the company through the Bitcoin blockchain. The Securities and Exchange Commission is an S-3 application and he hopes to issue up to 500 million U.S. dollars in executive power through blockchains, including common stock, preferred stocks, depository receipts, and so on.
There is a decentralized stock exchange Bitshare. Bitshare is an industrial-grade, open-source, decentralized financial automation contract platform that incorporates a decentralized trading system similar to that of the SSE or Nasdaq. The biggest difference from these traditional exchanges is that Because Bitshare is completely free to rely on anyone to run freely, all trading assets within it can be created and traded by anyone.
The platform has many outstanding qualities, such as its industrial-grade performance, the ability to meet the needs of a large concurrent volume scenario, and the design of stable digital currency and a so-called custom asset. So these are quite thorough, starting from technology, trying to subvert the existing infrastructure of such current securities, or some of the existing principles of corporate securities issuance. In fact, the securities industry of traditional securities trading institutions is also actively exploring and understanding the impact that blockchain technology may have on the industry.
The stock exchanges around the world are actually looking at or adopting a more aggressive and open-minded approach to technologies such as the Australian Stock Exchange and the Nasdaq, as well as the Chicago Mercantile Exchange, Deutsche Börse, Japanese exchanges, South Korea's stock exchanges, Canada's Toronto stock exchange, etc., are all actively exploring the use of blockchain technology.
We know that the securities industry is subject to corresponding regulations and some regulatory rules in all countries. Therefore, from a more realistic point of view, if blockchain technology wants to penetrate into the securities industry in large numbers, it may be more The pragmatic attitude is more to consider this need of the real securities industry, and then consider how to integrate the technology into the existing industries. If you simply want to start from just technology, you want to promote subversive changes in the entire industry, in fact, it is relatively naive.
Misunderstanding of blockchain: The essence of post-transaction links is the issue of system designNext I want to talk about the use of blockchain technology in the current securities industry in three aspects and some of the issues that participants in this industry are considering.
The correct way to open the blockchain
The first is that the application of blockchain technology to the securities industry should be a so-called licensed blockchain, rather than a blockchain that can participate without permission. Because the securities industry must be regulated by the corresponding laws and regulations in any country, and it also has corresponding requirements and regulations for participants, it must be in the form of a so-called licensing chain .
The most valuable possibility is also the cost savings
The second point is that the blockchain can only be tried in specific specific scenarios and then promoted to the entire industry. Some of the use of blockchain in the securities industry, and even its use in other industries, is actually a plausible one:
Some people think that a very important feature or feature of the blockchain is the so-called decentralization, which does not require third-party trust institutions. However, in fact, the use of blockchain in the securities industry does not completely replace the central third-party. Existence, the third party can only be reduced under the blockchain technology, but it must still have room for its existence .
In financial transactions, a trusted third party or a centralized organization has three functions. The first is to confirm, for example, that it needs to confirm the existence of a transaction item and confirm the legal and regulatory obligations of the basic design. The second function is maintenance. It must be able to prevent duplicate or improper transactions, or to own certain assets without authority. This is actually not allowed in the securities industry. The third is preservation. He wants to save transaction records to assist in analysis and supervision, and in the event of disputes, it must be able to use this record.
There needs to be clarified is that the existing system which, for example, everyone in the settlement time on such a settlement time 2 T +, in fact, not just, say, or a lack of technical bottlenecks in technology, in fact now Some technologies have no technical obstacles because of the centralized technology or centralized solutions. In other words, using the existing centralized technology, we only need to provide real-time settlement of such settlements if we provide that everyone should prepare cash and prepare securities before the transaction.
Furthermore, the existing lag or settlement of the settlement, for example, is actually a matter of design choice . He includes a deeper economic market framework, the most important of which is the issue of leverage and liquidity . If it becomes real-time settlement, for example, if we say that the transaction is completed within a few minutes, the cost it costs him may in fact be no less than the benefits he brings.
In other words, if we really change to real-time settlement, in the end it is more advantageous than harm or more harm than good, what impact will have to be carefully considered, we can not simply say that it must be a good idea. Real-time settlement saves cash and collateral, but it also requires large-scale changes in business processes, but also pre-determined securities and cash held before the transaction. We will see that the design of such a system in the securities industry will bring more liquidity risks.
It can be said that its practical blockchain technology to solve the problems in the post-transaction link, the most important value is not to shorten the time for settlement, for example, the actual design is actually formed within the industry for a long time, forming a possibility. Is a comprehensive consideration of a system, a structure or a system design.
When we talk about blockchain technology, it will say that its most valuable in the securities industry may still be the cost savings, not the shortening of time, because it can become a shared book. The benefit is that overall the cost of the entire industry will be reduced, and the security will be more secure.
Regulatory Attitude: Determined the Use of Blockchain Technology
Another factor to be considered in relation to the use of blockchain technology in the securities industry is: the attitude of supervision over him . Since the financial industry is a highly regulated industry, what kind of attitude the regulator will take is actually a decision on the use of blockchain technology and the pace of application in this industry.
Judging from the current situation, in fact, the blockchain technology has also received positive responses from the regulatory authorities of various countries. For example, the US SEC also holds a positive attitude toward it, and then the German securities regulators also responded positively. Such remarks.
In fact, it is particularly concerned about whether a new technology will bring security risks to the market, and whether the protection of the interests of consumers or investors is in place. This may be the issue that regulators are most concerned about.
In this respect, in fact, the regulatory authorities in some countries should say that they have made some suggestions that are very informative. For example, the British government put forward a regulatory idea that combines the so-called technical rule governance and legal rule governance.
The so-called technical rule governance, that is, the encouragement and guidance of technical regulations related to the implementation of the program is a technical code efficient, automated implementation of the government's financial tasks such as anti-money laundering, anti-terrorism financing and other fields. Technical rule governance and governance of legal rules should be considered as two important aspects of blockchain technology supervision. The focus of the two is different, but it is also complementary.
to sum upTherefore, from the current applications in this industry and some of the conclusions that we have obtained through continuous trials, we may simply give it a summary, that is:
Blockchain technology, from the perspective of development, should have a revolutionary impact on the settlement of the securities industry, but the process must be very long. Everyone must follow a step-by-step approach to promote its application in the securities industry. In fact, this is actually slow.
From the current point of view, all attempts made by everyone are actually combined with a single business scenario, such as a syndicated loan or some other application like securities. This application only considers individual applications. Under business conditions, how do we implement it and the benefits it brings to us after it is implemented? In fact, the entire securities industry is a comprehensive system that involves many factors. When we consider these issues comprehensively, there may be many different factors that need to be weighed.
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