A joint report by Euroclear and Oliver Wyman goes on distributed ledger’s advantages for capital markets, the difficulties slowing down the technology’s adoption and measures to fasten the process. 

In the first part of the report the authors describe technology innovations that blockchain brings about and benefits that stem from them: transparent real-time data and efficient settlement of transactions. In the second part the document proceeds with explaining that those benefits will induce a structural change in the capital markets. The authors claim that blockchain can provide benefits across all stages of securities trade settlement process (pre-trade, trade, post-trade and securities servicing) and redesign the role of market participants.

However, the authors name a number of obstacles that could impede the broad adoption of blockchain and originate from different spheres: technology, industry coordination, standards and governance, laws, regulation and policy. Taking into consideration those hurdles, the report states that, although the “wait-and-see” approach appears to be rather understandable and even logical, such stance may be considered “unwise”.

In the last part of the report the authors propose 7 steps for capital markets companies that should be made over the next year in order to quicken blockchain’s adoption throughout the industry. Among those steps they propose: 1) to work on concrete proofs of concept; 2) to challenge service providers to innovate; 3) to understand current quantification of operational costs, isolating savings from blockchains; 4) to continue industry-wide engagement, turning hype into collective endeavour; 5) to participate in prototypes and embrace the “learn by doing” concept; 6) to bring the business mind to technological start-ups, and 7) to prepare the narrative for regulators and supervisory bodies.

Euroclear group is a financial industry’s provider of post-trade services. It offers support in settlement, safekeeping and servicing of domestic and cross-border securities for bonds, equities and derivatives to investment funds.

Oliver Wyman is a leading management consulting firm, providing expertise in strategy, operations, risk management, and organisation transformation.

Anna Lavinskaya