Flow Chart Skyline

The Talent Challenge

A broad theme for NeuGroups in 2018 has been talent: fostering, cultivating, recognizing and most importantly, retaining it.

Lightbulb Skyline

ERP Specialist Broadens Its Horizons

Rebranded as Serrala Services, e5 sees the cloud opening up options for treasury.

iTreasurer logo 2016

Subscribe Now

Today is over. Subscribe to iTreasurer and
get ahead of the problems you will face tomorrow.

Software & Systems

Blockchain Coming to a Platform Near You

Share |
November 30, 2015

Blockchain tech will soon power financial markets used by corporates.

BitcoinBlockchain technology use may not yet be widespread, but current paper-based corners of the financial markets accessed by corporates are likely to see its benefits in 2016 or maybe sooner.

The Nasdaq recently announced its initial roster of private company clients that will use the recently launched Nasdaq Linq platform, which makes use of the digital ledger technology pioneered by bitcoin. In the case of bitcoin, the largest digital currency, the technology essentially organizes transaction data into blocks that are encrypted into a chain that is continually updated in the digital ledger shared by every bitcoin user.

Although the currency has been used with varying success, the underlying technology remains sound, since corrupting the blockchain would require breaching digital ledgers scatter across thousands of servers worldwide. In addition to be highly secure, transactions occur directly between parties on the shared ledger, almost immediately, and can eliminate the need of a middleman.

The same digital ledger technology can be applied to other types of data, not necessarily transactional. In the case of Nasdaq, its service aims to facilitate the issuance, cataloging and recording of private equity transfers of shares of privately-held companies on the NASDAQ Private Market. The first companies to sign on, unsurprisingly, are technology companies including Chain.com, a blockchain technology provider that collaborated with Nasdaq’s technologists to create the service.

The other companies signing up are ChangeTip, PeerNova, Synack, Tango and Vera, with the service expected to go live by year-end 2015.

“Nasdaq Linq clients will be provided with a comprehensive, historical record of issuance and transfer of their securities, offering increased auditability, issuance governance and transfer of ownership capabilities,” Nasdaq said in a statement.

Private equity has become a major funding source for especially technology companies and it has long been used to reward executives. Nasdaq Linq will provide a record of the transfers in shares of privately held companies that will be easy to access and much more secure than a central database that can be hacked.

“Nasdaq is also looking at how blockchain could be used for proxy voting,” said a Nasdaq spokesman. The exchange company recently announced it will seek to manage proxy voting via blockchain technology in Estonia, as its next proof-of-concept for the company's blockchain initiative.

Blockchain technology may also be used in the syndicated loan market as soon as second quarter 2016. Digital Asset Holdings, based in New York, was founded in March by well-known Wall Street innovators and is run by Blythe Masters, a former top executive at J.P. Morgan who played a significant role in the creation of credit derivatives.

Syndicated loans remain a highly manual and paper intensive market in which transactions can take weeks to settle. The firm’s technology would essentially turn syndicated loans into smart contracts, computer protocols that mimic the elements of a contract and can be partially or fully self-executing, that are issued on an electronic ledger shared by market participants. As a result, “there is no need for reconciliation, so clearing and settlement could happen in minutes,” note Shagun Bali and Terry Roche in a November report pushed by consultancy Tabb Group titled “Blockchain Technology: Pushing the Envelope in FinTech.”

“Furthermore,” the report says, “as smart contracts the loans would perform all of their corporate actions automatically, which would result in less back-office processing throughout their life cycle, providing long-term cost savings, too.”

comments powered by Disqus