The Monticello team attended SIFMA’s Blockchain/DLT in Action: Settlement Unleashed last week. The conversation with several panelists from Broadridge Financial Solutions and UBS Securities highlighted the operating model and an industry trend of market participants and infrastructure players pioneering a technology and operational transition from handling traditional assets such as cash currency to tokenized Crypto-currencies native to Blockchain.
Based on a survey conducted during the event, over 57% of participants would anticipate benefits being realized by adopting Distributed Ledger Technology (DLT) using Blockchain technology to better facilitate Settlement and Payment processing functions. Over 35% of the participants reported that their organizational are actively developing and testing DLT solutions to streamline Trading and Settlement functions for some financial products. Many financial institutions, that do not have right talent and capabilities in-house to build out the technology and operations infrastructure, may choose to partner with a market player or solution provider, to gain access to a Blockchain/ DLT platform and accelerate their service/product offerings. The panelists also spoke about the success story of leveraging a Blockchain/ DLT platform to facilitate “repo” transactions. transforming the manually intensive repurchase agreement workflow, enabling better asset-ownership tracking, reducing operational risks, and increasing intra-day collateral liquidity.
The panelists did not see any major hurdles in willingness from financial institutions or market participants to adopt a Blockchain/Distributed Ledger Technology platform; nor did they see any limitations in technologies being used. Regulations; however, are still the major unknowns, or they are yet to be defined like OTC derivatives. The market will continue to see early adopters leveraging Blockchain/DLT to better facilitate security insurance, trading and settlement for fixed income, equity, commodity, and FX products in the next few years.
At Monticello, our consultants continue to participate in industry thought leadership events to ensure our clients are advised on emerging digital trends and leading practices on how best to design their digital journeys. Monticello recently published an insight on Financial Services Industry Leading Blockchain Adoption in January. We look forward to working with our clients to support their digital enablement, optimization and transformation initiatives in 2022 and beyond.
