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The impact of distributed ledger technology on post-trade
Journal of Securities Operations & Custody,
13
(4),
320-334
(2021)
Abstract
The financial markets industry has for a long time experimented with blockchain technology and developed many use cases which the market participants over many years have tested the technology against. While there have been many projects, the broader adoption of blockchain has yet to materialise in financial markets. Other industries, notably supply chain, have successfully rolled out global blockchain networks and are seeing the benefits of this technology at a larger scale. The failure of many projects has been down to a set of common factors, for example, the lack of a solid business case or the effort required to align consortium partners to a common goal with a new network. The emergence of digital assets and central bank digital currencies (CBDCs) could be seen to be the catalysts for blockchain on a wider scale in financial markets. They have the potential to disrupt financial markets and especially post-trade as we know it today. Almost 80 per cent of central banks are experimenting with CBDC, and it is just a matter of time before this goes mainstream. Established financial institutions must adapt to this in order to face the threat from new market entrants, and the ecosystems that are being created or face disintermediation.
Keywords: blockchain; central bank digital currency; digital assets
The full article is available to subscribers to the journal.
Author's Biography
Søren F. Mortensen is Global Director Financial Markets at IBM. Søren has more than 25 years of financial markets experience in delivering mission critical transformational projects for financial institutions. This includes complex transformations of financial institutions, innovation in financial markets leveraging new technologies such as Artificial Intelligence, quantum and blockchain and post-trade initiatives around intelligent operations, reference data management, collateral management and over-the-counter (OTC)-derivatives processing. In addition, Søren has been involved with many post-trade utility and consortium initiatives. Prior to rejoining IBM in 2013, Søren was managing director for SunGard Global Services in Europe engaged in developing and delivering service solutions around SunGard products working with several tier 1 European clients. Having previously worked at financial organisations such as Morgan Stanley, Paribas Capital Market and Halifax Bank of Scotland (HBOS) Treasury, he brings a practitioner’s view to the challenges faced by customers today. Søren has, since January 2017, been an adviser to the Consultative Working Group of European Securities and Markets Authority’s (ESMA’s) Financial Innovation Standing Committee (FISC) advising European regulators on technology and innovation, he is also on the advisery board of the Enterprise Data Management (EDM) Council.
