According to a Reuter’s report, Swiss exchange SIX believes that its traditional trading platform might be overtaken by an alternative it is launching based on blockchain technology. The transition, however, may take a decade for this to happen.
Digitization has already taken place there are still some areas that require the use of paper and posts. The blockchain-based platform is being developed with the hope of doing away with these old protocols. Thomas Zeeb, the Head of Securities and Exchanges at SIX said that the traditional platform will be overthrown by digitization in the next decade.
By mid-2019, SIX Digital Exchange (SDX) would be launched. Initially, it will run parallel to the traditional SIX platform that is currently in use. The traditional SIX trade platform includes three steps to complete a sale or purchase of securities which usually takes six days time and sometimes even more.
Out of three steps, two will be eliminated as digitization of the trading platform takes place. The blockchain-based platform will make the process of buying and selling of securities quicker than ever before. Explaining the level of speed that could be expected from the digital ledger ‘Zeeb’ a Canadian said that the cost will move relatively quickly when the brokers, insurance companies, banks, and big asset managers apply to buy or sell securities.
There are certain numbers of exchanges such as Deutsche Boerse that are currently working on the projects similar to the SIX blockchain project. The sudden growth in cryptocurrencies such as Bitcoin is actually supported by the blockchain, as a result, the technology quickly helped companies like Coinbase in San Francisco or Hong Kong-based Binance to gain millions of customers.
These customers are quickly moving to exchanges as well as to banks. This is a challenging situation of stock exchanges and banks. SIX faces certain legal issues with the Financial Market Author.
SIX still needs to clarify legal issues with the Financial Market Authority watchdog and the Swiss government. The SDX will be operational meaning it will start offering trading opportunities once SIX clears all pending legal issues. Initially, SDX will enable the trade of stocks and later bonds. In the later years, the platform may even exchange-traded funds as informed by Zeeb.
The blockchain-based platform will not be limited to just stocks and securities. It may, in fact, offer the trade of paintings, vintage cars and more on its platform but all this may take some years. The SDX was first announced in July and is now nearly close to being launched officially. The platform, however, is likely to shy away from bitcoin trading. However, it does have plans to help companies launch initial coin offering to raise funds for their respective endeavors. There are many other ways by which the platform intends to help boost the business of the companies and make its platform widely available. It seems like we will have to wait until mid of 2019 to know the exact plans of the SDX and how it executes them.