This question relates to capital markets generally, and includes the Islamic capital market.
Block chain technology can reduce costs of doing business in capital markets by fast and timely dissemination of information thereby increasing efficiency. Given the nature of administrative control of Islamic financial systems regarding risks, profits and transparency, certain scholars are of the opinion that blockchain technology can be further developed through detailed record keeping that can allow for timely decisions and promote the system's integrity.
Good analysis! Specifically, how can blockchain technology enhance the securities settlement process in transactions in the capital markets?
Recently the Bank of England released a Working Paper titled: "The economics of distributed ledger technology for securities settlement", and its quite comprehensive.
A recent Bank of England working paper identified ways DLT can help in reducing the cosband enhance efficiency in various post-trade processes. Similar findings were reported in a BIS study. One may not necessarily say the current securities settlement is inefficient. Rather, how can its efficiency be enhanced through DLT.
questioning how efficiency can be improved implies relative inefficiency - without the latter there is little need for the former.
factors that i can think of that may be relevant to efficiency in this case are: 1) speed, 2) cost, 3) risk/ security, 4) variation (extension). there may be others.
so it becomes a question how blockchain technology etc can impact the above
Excellent! Some of the factors Brian listed have been discussed in the BIS and BoE documents.
5) flexibility
i think a crucial question is also whether the technology can not open the door for and introduce new participants to the market
You are right! This is quite important, as DLT would allow more participants in the market. Market accessibility through the flexibility technology provides is quite important.
- Badges
- Science topic