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Storing and concurring data related to financial obligations lies at the heart of capital market operations. The current process of securities clearing is highly complicated as fragmented data architectures are utilized and common standards are absent. This gives rise to the need for reconciling data with massive systems and several reconciliations. The participants in the complex clearing and settlement process include the clearing corporation, clearing members, clearing bank, depositories, and brokers. Several steps are involved right from trade to the final settlement. This paper delves into each of these steps and discusses how blockchain can help address the existing challenges in clearing and settlement.
Once blockchain is incorporated into the trading platforms and clearing banks, the trading process becomes simpler. After querying the blockchain system at the back end to check for available securities and fund balances, the trade is confirmed. The shared ledgers enable real-time querying. The use of blockchain eliminates counterparty risk and brings down the number of intermediaries involved, thereby reducing the charges. This, however, represents an ideal end state view. For best results, in reality, one needs to take small steps. Find out more in this whitepaper. Click here to get your copy.