The securities laws and regulations would be an ongoing phenomenon to evolve in lockstep with the industry itself, as well as the role of technology solutions, so as to come up with some viable alternatives - not an easy process.

That is where the constant innovation and technologies are in place, for now, the Distributed Ledger Technologies (DLT/Blockchain) are the hot topic, which is invented as the shared, tamperproof, peer-to-peer digital ledgers that enable a single, global version of transactions. Is blockchain technology a viable solution in securities markets as well?

Blockchain or Distributed Ledger Technology (DLT) solutions in the payments world seem about a dime a dozen at the moment. But less is heard about bringing blockchain to the securities industry, even though current securities post-trade processing holds a large amount of inherent risk.

Of course, the generic promises DLT brings regarding cost savings and efficiency gains whilst reducing risk remain the same across both industries.

But is blockchain technology a viable solution for the securities markets? Does the industry want to move forward with DLT and, if so, how will this progress from use case to business case? What are the challenges to overcome and what opportunities lie ahead? These issues were discussed at the ‘Blockchain – From use case to business case in securities markets’ session at Sibos in Toronto this year, and SWIFT interviewed Tom Casteleyn, Head of Product Management for Custody, Cash, and FX, from BNY Mellon to provide an overview of key topics and concerns going forward.

The benefits that blockchain can bring to the post-trade securities industry could mean the introduction of efficiencies into today’s system laden with cumbersome, manual processes and a great deal of inherent risk. The ecosystem that we have today in terms of recording and processing assets has evolved over many years.

The life cycle in payments really only consists of a transaction and balance, followed by the payment or debit of interest, the complete lifecycle of a security is a much more complex business involving a variety of different elements including income, tax withholding, corporate actions and voting (including proxy voting). On a purely transactional basis, the placement of payments on the blockchain, as opposed to securities, is much more straightforward.

In terms of the securities industry, however, there is a broad agreement that blockchain can provide scope for potential change in two main areas, including:

Improvement of current post-trading processing and Transfer of non-automated, non-centralised assets.