Have you ever heard of Algorithmic Trading? It is an automated trading which uses computers programmed to follow defined rules of instructions for trading in order to achieve profit at a speed without any biases.

Now, Blockchain based software can help in some parts of the trading cycle and making data available to everyone in a secure way. Well, it can also help with the efficient proxy voting and minimizing systematic risk like insider trading.

In a recent news published on Economic Times, it is discussed whether blockchain can help the future stock market or not. We have taken insight and studied it.

Blockchain as driving force :

In the world of the blockchain, the intermediaries are perceived as the biggest barrier for its adoption. However, research shows that most of the organizations do not believe intermediaries will be a barrier for increasing blockchain investments on the stock market. This is because many market intermediaries and global exchanges have already shown their intent to evaluate the advantages of the blockchain.

As per a recent example, “Japan’s Financial Services Agency has allowed the Japan Exchange Group, which operates the Tokyo Stock Exchange, to use blockchain as its core trading infrastructure”. As a whole, there is a slow movement on the development of the required frameworks. Still, there are many agencies watching the approach and studying the blockchain’s regulatory policy before getting into it.

Also read: https://www.sphinx-solution.com/blog/category/blockchain-development/

Major benefits :

The interoperability, trust, and transparency are some of the biggest advantages and these factors can help to support the fragmented stock market systems. There are different participants like traders, brokers, intermediaries and stock exchange and all need to go through a hectic process.

Being a decentralized ledger, the use of blockchain technology development can make the exchanges more optimal through automation. It can also reduce the costs of the process resulting in fast transaction settlement. Also, the technology can be used in clearing settlement, easing trade paperwork and legal ownership transfer. So, this, in turn, will lead to higher liquidity and investments.

Looking to this advance scenario, effective governance is the major factor to the successful implementation of blockchain to ensure the system is free of cybersecurity threats and other fraudulent activities. With blockchain’s potential to disrupt the financial services and in automating trade-event processing, we can expect it to see a bright future.