A huge 84% of market infrastructure providers are looking at whether distributed ledger technology (DLT) – commonly known as blockchain – could be applied to their business, according to research.
A study by the World Federation of Exchanges (WFE) found the majority of firms it surveyed were investigating DLT, with some already actively pursuing DLT initiatives.
Among the 24 financial market infrastructure providers surveyed, one had already deployed a DLT application, while some are the proof-of-concept phase and other in the very early stages of evaluating the technology.
Clearing and settlement processes were seen as the areas likely to see the biggest impact from DLT development thanks to process efficiency and cost savings that can be derived. However, the WFE said some firms are looking to use the technology to push new services and revenue opportunities.
However, the technology faces a number of barriers to its future development, including being a relatively new concept, regulatory issues and legal and technical risk factors.
Nandini Sukumar, CEO of the WFE, said: “A powerful finding from our survey is the overwhelming number of FMIs who are already progressing work around DLT. This shows we are firmly moving towards a world where the technology could become applicable to global capital markets. DLT has been a key strategic focus for the WFE Post-Trade Working Group, and today’s research report is the first in a series of public material we will be issuing on the topic.”