Live distributed ledger technology (DLT) has increased by 400% since 2021, according to recent research from ISSA and ValueExchange.
The figure comes from the companies’ “DLT in the Real World” whitepaper, the culmination of their campaign to explain why, where and how DLT is being used in capital markets. More than 150 organisations from across the investment industry were surveyed annually for the report.
As digital assets and DLT become increasingly important elements of the industry, 2022 has seen pilot initiatives go live, with 50 per cent of DLT cases intended for commercial usage. Eight per cent of those surveyed were using DLT “live and in production” in 2021 — in 2022, that figure is now at 32 per cent.
The uptake of DLT is a result of new asset classes, Barnaby Nelson, CEO of the ValueExchange says. “[They] have begun to evidence the significant value of DLT in the capital markets in 2022 — delivering quick returns in liquidity, risk and costs.” The report predicts that DLT usage will cover a wider range of asset classes in the near future, expanding beyond its current main users: crypto assets and bond issuance.
This value is realised when DLT and blockchain projects are produced at scale, according to the report. For 58 per cent of market participants, the first step as they look into DLT adoption is building relationships with ecosystem providers. This occurs well before technology selection and development, demonstrating the importance of finding partners that can meet enterprise-grade requirements and accelerate rollout.
Additionally, there has been a change in approach to DLT implementation. In 2021, 36 per cent were building their DLT platforms in house. In 2022, this shifted to 34 per cent of the market choosing to buy in DLT technologies.
Horacio Bakarat, head of the DLT repo platform at Broadridge, states that the company is “seeing its clients generate immediate savings of around 10 per cent on their clearing fees”. Almost half of the market (49 per cent) is using DLT with a focus on the post-trade efficiencies, with only 17 per cent prioritising issuance and 35 per cent focusing on front office-related efficiencies.
The full whitepaper report will be released at SIBOS 2022, which takes place between 10-13 October.
