Nasdaq has found that stock exchanges will be slow to adopt blockchain technology.
The Wall Street Journal reported the results from a study commissioned by Nasdaq and carried out by financial and technology research firm Celent. The study concluded the reason is the IT providers of exchanges are in the early stages of testing blockchain technology.
In fact, only 5% of the firms polled have implemented blockchain in some form, while 40% already use cloud computing, 70% robotic process automation and 35% AI.
Despite this, 70% say they are working on trial projects, while 20% respond that they have ‘no plans’ to implement and 5% lack the technical expertise to say.
CTOs, CIOs and other senior technology staff at the 20 leading market infrastructure firms worldwide took part in the poll.
This proves surprising because you would think a shared history of immutable, time-stamped and encrypted data would be a boon to exchanges.
The authors of the study, Arin Ray, a senior analyst at Celent, and Joséphine de Chazournes spoke at the Technology of the Future conference in Stockholm. They explained that part of the issue is ensuring blockchain can provide the same speed and scalability as traditional methods.
Plus, maintaining regulatory compliance while using blockchain requires a lot of time and work before roll out.
“Ensuring [the] resiliency, safety and stability of systems is very important because market infrastructure players are highly regulated and play a critical role in the functioning of markets,” says Ray.
Moreover, getting stakeholders to agree when creating a completely new system is “extremely difficult”, especially where international transactions are concerned.
Finally, budget issues also remain a concern. IT budgets at some firms are already spent on maintaining current systems, leaving little to be used for investment in new technologies.
However, there are some widely publicised stock market projects. For example the Toronto Stock Exchange is part of a trade settlement Proof of Concept, and the Deutsche Börse Group is working with HQLAX to launch a securities lending platform.