The adoption of blockchain technology among stock exchanges is expected to offer significant scope to improve the efficiency around settlement/clearing and collateral management. As a reminder, settlement in the exchanges space is typically T+3 days, but the delay is principally due to market practices, financial industry laws, and regulatory requirements and not necessarily to current technological infrastructure. The industry has already been discussing the potential to reduce settlement to T+2 (already common in Australia) and the implementation of blockchain could act as a catalyst to drive down the settlement period further towards T+0.
Regulatory and legal challenges require resolution before we see wide-spread adoption. The use of blockchain/distributed ledger for settlements could provide a secure, consistent source of proof of the current ownership and provide the origin of assets to custodians, agents and beneficial owners. We note the constraint will clear