[ A D V E R T O R I A L ]
reduction as well as provision of new ser-
vices. Exchanges will have a central role
in driving and guiding broker-dealers and
other sell-side firms through this change
whilst providing them with the necessary
insight to the proposed changes early
enough to allow them to analyse their
existing business models.
Finding the right use case
For the ASX, blockchain is seen as a new
internet with possibilities of launching
various applications and features on top
of the platform. Much like how Amazon,
eBay and Google are products of the
internet, blockchain technology is the
underlying infrastructure of a shared and
distributed database for which applica-
tions and services can be developed and
offered either by the platform owner or
their client base.
The evolution of technology could mean
exchanges are able to become not only
providers of risk management and resil-
iency, but are able to build value-added
services on top of their infrastructure to
banks, broker-dealers and buy-side firms.
At the same time, the participants who
directly connect to the platform could
integrate the available data to the other
information inside their organisations to
supplement existing or new services to
their client base.
Blockchain may not be the quick-fix
solution for every challenge, so finding
the right use case for the technology
will ensure its success. HKEx was able
to identify its ideal use case for block-
chain with, what is set to be, the first
application built on top of Digital Asset’s
platform.
Nevertheless, DLT may not be the
one-size fits all solution that will meet
their operational requirements in all the
markets they operate in. Moreover, the
way the big sell-side firms approach the
DLT evolution may not all be the same
depending on where they focus their
business growth ideas and it is plausible
that organisations will wait until the
technology takes a greater role across the
region before they directly connect to the
platform.
Local players that are more domesti-
cally-focused in nature may not be at the
same level of technological competency,
and are strapped for budget to adopt
certain technologies. Tools must be
developed to support all firms accessing
the technology, be that through applica-
tion programming interfaces (APIs) or
a web-based platform for smaller-sized
brokers. If blockchain technology is going
to be the new norm and industry standard
of operating models, all participants in-
volved in rolling out this technology will
have to ensure there is a choice of access
for the different types of customers they
have and deliver value.
From cost to value
Despite the level of optimism in the
industry for the technology, conversations
still largely focus on cost, particularly in
Asia as previously mentioned. Looking at
the big picture with regards to efficien-
cies is very difficult for smaller local firms
when meeting international standards is
not the top of their agenda.
In addition, a lot of the global players
will have to balance the costs of tech-
nological innovation with some of the
longer-term regulatory costs they have in-
curred and will be subject to. The danger
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