Stock Exchanges Yet to Join Blockchain Revolution, Nasdaq Study Finds

Stock exchange operators and market infrastructure providers are not adopting blockchain at the same pace as other sectors, according to a report by Celent and Nasdaq.

Nasdaq, the operator of the second largest stock exchange in the world, reported on Tuesday that stock exchanges are in no hurry to adopt blockchain even though sectors such as manufacturing, retails, payments, and distribution, have been testing and implemented the technology for various use cases.

The principles underlying blockchain - transparency, automation, and lower costs - seem to suit the current needs of stock exchanges and infrastructure developers. However, research and consulting company Celent, which conducted the study on behalf of Nasdaq, discovered that the majority of market infrastructure developers across the globe are not betting heavily on blockchain, and those that are remain at an early stage.

The report says that only 5% of infrastructure providers have developed tools based on the distributed ledger technology (DLT), as blockchain is also called. Moreover, 20% of the exchanges have no intentions to implement it at all.

However, 70% admitted they were carrying out blockchain trials, with 5% saying they lacked the necessary experience to do so.

It is worth mentioning that stock exchange operators and infrastructure providers do not want to steer clear of implementing other innovative technologies. Thus, 40% are using cloud computing, 35% are applying artificial intelligence (AI) tools, and 70% are making use of robotic process automation.

The report is based on answers from CIOs, CTOs, and other senior executives working for 20 market infrastructure companies worldwide.

One of the reasons stock markets are not adopting blockchain en mass might be the fact that IT budgets are planned for maintaining the existing systems, which leaves minimal resources for a shift to new technologies, Nasdaq says.

Last year, the Australian Securities Exchange (ASX) decided to replace its Clearing House Electronic Subregister System (CHESS) with a blockchain-based system. ASX will utilize the technology to register shareholder stakes and manage clearing and settlement processes. The operator is probably the only exchange right now that fully relies on DLT for complex processes.