Blockchain technology has the potential to revolutionize the way securities are cleared and settled, offering a decentralized and distributed ledger system that offers a number of advantages over traditional central securities depositories (CSDs) like the Depository Trust Corporation (DTCC).
One of the most pressing issues that blockchain technology addresses is the problem of share ownership discrepancies, such as the case of Dole Foods in 2016 where multiple sets of books for record-keeping and more than a dozen different stakeholders claiming ownership of the same shares. Blockchain solves this problem through its ability to track all transactions in real-time, eliminating any discrepancies and increasing transparency.
Another key benefit of blockchain technology is its ability to improve the efficiency and speed of the clearance and settlement process. Unlike DTCC’s legacy technology infrastructure, blockchain can process and confirm trades within minutes, as opposed to the several days that traditional systems take. This can lead to significant cost savings for both financial institutions and individuals.
Furthermore, the decentralized nature of blockchain technology eliminates the concentration of power in the hands of major banks, as it allows for more competition and fairness in the marketplace, leading to better services and innovation for the customers.
Finally, blockchain technology provides a level of security and immutability that is not found in traditional systems. Blockchain is a decentralized, distributed ledger, meaning that the data is stored across a network of computers, rather than in one central location. This makes it much more difficult for hackers to tamper with the data and almost impossible to alter or delete transaction records.
The use of blockchain technology like XDEX for securities clearance and settlement has the potential to revolutionize the way the financial industry operates. It can resolve share ownership discrepancies, increase transparency, improve efficiency and provide a level of security that is not possible with traditional CSDs like DTCC. It is important for the financial industry to explore the use of blockchain technology and move towards a decentralized, distributed ledger system.
To learn more about XDEX and how it can help you, contact the 10XTS team today!