This year, the financial markets has seen a major upsurge in the usage of distributed ledger technology (DLT), with over a third of the industry now using the technology, according to the International Securities Service Association (ISSA).
In a report, entitled “DLT in the Real World”, in association with the ValueExchange, ISSA outlines a four-fold increase of DLT live usage compared to 2021.
The trend appears to be driven strongly by organisations implementing capabilities to support crypto currencies and tokenised bonds.
The third annual version of the survey highlights a move away from experimentation with DLT to a focus on commercialisation in 2022, with more than half of projects now intended for live, commercial usage.
The survey also finds that while commercialisation manifests itself differently in each sector of the market, the majority of current projects are more focused on facilitating new product launches and internal efficiencies, rather than on creating market-wide efficiencies.
Along with the focus on crypto, market participants are also launching solutions to tokenise a growing number of asset classes, with securitised assets, private equity and listed equities all set to grow significantly in usage and importance.
This is facilitated by a continuing reduction in the volume of blocking obstacles that organisations face in deploying DLT – falling from 31 per cent in 2020 to 16 per cent in 2022.
With this research campaign, ISSA said it aims to find solutions to reduce risk and improve efficiency and effectiveness from issuer through to investor, as well as to provide initiatives to shape the future of the industry.
Commenting on the survey findings, Colin Parry, CEO of ISSA, says: “DLT is starting to deliver real results for the industry today and tokenising highly paper-based assets — such as securitised assets, mutual funds and private debt — is clearly yielding positive returns in 2022.”
“Whilst performance against expectations may lag for securities that have already been dematerialised, the outlook for growing DLT-driven efficiencies in 2023 is clearly positive.”
Barnaby Nelson, CEO of the ValueExchange, adds: “We are excited to see the value of DLT growing and widening from the traditional, perceived benefits of enabling atomic settlements and smart contracts to also include real-time data processing and synchrony.”
“With regulatory limitations still holding up 26 per cent of DLT projects, the use of blockchains simply as a real-time ledger offers firms the opportunity for significant and immediate efficiencies especially in areas such as over-the-counter derivatives.”
