Efficiencies Unlocked Through Instant Verification
Institutions working in capital markets are increasingly looking to blockchain solutions to provide faster, more secure and less expensive ways of doing business for asset exchanges and the enterprises connected to them. In an industry where success is measuring in milliseconds and the consequences of error in billions, blockchain rightfully is becoming a larger topic of discussion each day.
Of all the potential applications of blockchain for capital markets, perhaps most important is that blockchain can effectively eliminate all counter-party risk. Blockchain ensures that neither party in a given transaction can default of its contractual obligation because both the purchasing power of the buyer and the asset of the seller can be instantly and independently verified when the parties agree to exchange. This foundational advantage solves an issue that has plagued the space since its creation. No longer will there be excessively long waits for clearing and settlement, nor will there be defaults because a counterpart fails to comply with their obligations under agreements.
The sweeping advantages of blockchain help reduce risk and increase efficiency for various capital market entities, such as central banks, stock exchanges, custodians, clearing and settlement houses and fund managers. While much of that benefit is typically discussed theoretically, at nChain, we develop practical solutions that put it to use today.
Knowledge is power.
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Opportunities in Capital Markets
Central Bank Digital Currencies
nChain helps central banks ease the transition to a world where blockchain technology is the foundation of business. Central Bank Digital Currencies (CBDCs) offer a number of benefits – both in reducing crime and reducing system friction. We are working with central banks in Europe to create new ways of reducing costs in the selling and reconciling of transactions, making more cost effective cross-border payments, creating the auditing tools to develop better monetary policy and more.
Immediate Irrevocable Settlement
Blockchain brings greater security, more dependable risk management, and a greater transparency of the liquidity of stock exchanges. On-chain transactions creates a trustless system of verification that eliminates the bottlenecks of settlement currently. Additionally, the controlled transparency that blockchain offers creates opportunities for automatic reporting and finer supervision for market authorities.
Eliminating Separate Settlement
Blockchain increases trade efficiency at a fraction of the cost of traditional clearing and settlement systems. Due to the fundaments of the system, trades do not require separate settlement verification – the trade is the settlement. Blockchain removes many of the intermediary steps in any trade because both the funds and the asset are authenticated and verified in real-time through the immutable and undeniable record of the ledger.