The Nasdaq Stock Market has begun using blockchain technology to power its European mutual funds business and a key executive has hinted crypto could be incorporated to further streamline processes.
Nasdaq’s Head of Blockchain Product Development, Johan Toll, has revealed eight Swedish banks have collaborated with the exchange in using private permission hybrid ledgers to optimise mutual funds trading.
“The mutual funds business in Sweden, in the Nordics, in Europe and in many places in the world are very, very fragmented, a lot of intermediaries, it takes a long time to settle the trades and it’s a lot of manual intervention, fax machines are even used still,” said Mr Toll in a recent interview.
“So for that we see where blockchain can have a really, really good role here for how we could create a shared trusted network between the intermediaries and guarantee them the transfer and issuance of those shares, as well as manage the payment of those shares.”
Nasdaq crypto, tokenisation, but not Bitcoin
While the mutual funds project is in its early stage, Nasdaq is exploring further blockchain-based post-trade optimisation.
Tokenisation for assets issuance and the use of a ‘form’ of cryptocurrency to complete peer-to-peer payments are being considered, however Mr Toll made it clear he doesn’t believe Bitcoin is a good fit for Nasdaq.
“So if they get your private key they can literally steal all your bitcoins and there is no way for you to get them back.”
Blockchain use cases ‘exploding’
Mr Toll says he’s convinced blockchain technology will eventually completely revolutionise post-trade processes for major exchanges and markets across the world, and he believes the number of other blockchain use cases is ‘exploding’.
“It’s very relevant for the financial industry but we can see many, many other industries, any industry I would say, that could use this technology.
“For tracking purposes for example, for provenance purposes and transparency purposes like in the shipping industry, the diamond industry, commodities or medical records industry, healthcare etc.
“We can see how this technology is exploding, in terms of interesting use cases that people are working on.”