Huw Jones

LONDON, (Reuters) – Blockchain has to have its own music industry MP3′ as fragmented technology and regulation hinder the growth of a digital security industry that can help it realise its full potential. Industry officials stated.

The blockchain, also known as distributed ledger tech (DLT) is the backbone of cryptoassets such as bitcoin. It allows multiple parties to have access to a single copy of data simultaneously.

Gerd Hartung is the head of digital markets for Deutsche Boerse.

The real question is “How do we make MP3 digital formats like the ones you can see in the music business?” “The next stage is the digitisation and management of financial instruments,” he stated.

The inferior quality digital MP3 files didn’t seem like an innovative technology before the advent of MP3 players. Streaming systems and MP3 players dramatically changed the music industry. They removed a lot of middlemen and virtually all barriers that artists faced to entering the market.

According to industry experts, a similar pivot would make it possible for financial instruments to be issued in less time than in days or even weeks. It will also allow the instrument to better target specific markets.

However, it could also threaten the dominance of banks within the revenue chain to trade and issue securities.

LedgerEdge was launched this week, which is described as being the first DLT-based regulatory corporate bond platform.

David Nicol (chief executive officer and co-founder at LedgerEdge) stated that everyone is seeking greater clarity regarding the regulation of digital assets.

Arjun Jayaram (founder and chief executive officer of Baton Systems), warned that many pieces are still to come together, but it was unlikely there would be a “big boom” moment.

He said that banks still use old technology which makes it difficult to connect with DLT platforms. Javier Hernani head of Securities Services at SIX, which manages the Zurich stock exchanges and Madrid stock exchanges, stated that hooking up blockchain is a costly process.

Hernani pointed out the necessity for digital currencies like the euro, dollar and sterling in order to accelerate payment. This is something that the relevant central bank have not yet decided on or launched.

A “bridge” is needed in order to enable digitized assets to be traded but to be paid for using fiat currencies.

The new technology is complex and regulators need to be able to deal with it. Britain, the European Union, and the United Kingdom are preparing for DLT to be tested in the market infrastructure.

John Glen, Britain’s minister of financial services, stated that the government plans to get this system up and running by next year. “If it shows us that we have to update relevant legislation, we will also do that,” Glen added in a speech last month.

According to the EU, its pilot program would enable policymakers and regulators to spot regulatory obstacles.

PARALLEL SYSTEMS

HSBC Wells Fargo (NYSE:) Already using Blockchain from Baton Systems for bilateral foreign currency trades. In July Deutsche Boerse plans to use its digital central registry to provide same-day-issuance and paperless process for digitised certificates, warrants and warrants within its Clearstream Settlement arm.

Hartung stated that while we have already done proof of concept in the past it is now about creating the actual, full-fledged digital financial market infrastructure. This needs to be productive as well as scalable.

Rival Euroclear is now part of the Fnality blockchain consortium – supported by Santander and other banks (BME : Barclays (LON:), Credit Suisse MUFG, Credit Suisse & UBS – which aims to open a Bank of England payments account in October for tokenized assets.

The U.S. Depository Trust & Clearing Corp’s platform that leverages DLT is moving to a development phase for same-day settlement of securities trades, compared with two days at present.

Experts believe that blockchain could bring 50% cost savings to areas such as settlement. This is mainly due to the reduction of time-consuming reconciliation or fixing mismatches between transaction data.

Additionally, trades are completed faster and there is less risk.

Deloitte has estimated that a single shared version (or one-third) of the trade data for derivatives markets could lower costs.

It claims that DLT could be combined with a machine-readable blueprint of how derivatives are traded and managed, which would reduce the dealer cost base by $3.2 billion.

SIX, which introduced a digital bond last November, is seeing progress in the new year.

Hernani, the company’s CEO said that “we are moving from proof-of-concept to the real world slowly.”

We will see real business but in small amounts. Parallel systems will exist for some time, I believe.”