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[ I N - D E P T H | B L O C K C H A I N ] structure reaches obsolescence or in areas that lack market infra- structure,” says Palychata. “For instance, we are also investigating use cases for derivative contracts or non-listed instruments that do not benefit today from the same level of automation than listed products.” As with any new hyped tech- nology, there is also the further challenge of harmonisation with regulatory standards. “It’s unlikely blockchain will completely decentralise clearing and settlement in the near future, as there are many political, legal and structural issues to address,” says Summerville. “But what I do expect to see is more centralised structures applying DLT technol- ogy. Eventually, I imagine that as DLT technology evolves and is used more widely in other indus- tries, the market will become more comfortable with the concept of decentralisation, and with some current DLT technology issues addressed, the clearing and set- tlement will eventually be seen as essentially redundant.” DTCC’s Peve agrees: “We believe it is too early to predict the extent to which DLT can be applied to clearing and settlement. Any mar- ket infrastructure provider looking to apply DLT to an existing process should collaborate and implement best practices to prevent technolo- gy silos from being created, which could lead to the same reconcili- ation and interoperability issues experienced today.” The future of clearing is open to infinite possibilities but it will require patience to get there. Public Blockchain vs ASX Private Permissioned Ledger Public blockchain ASX private permissioned ledger Not applicable to highly regu- lated markets Similar to today, but an en- hanced database architecture Unregulated Highly regulated market ˜ ˜ No restrictions on ability to ˜ ˜ Infrastructure providers ˜ ˜ Users are anonymous or ˜ ˜ Rule book defines market ˜ ˜ Limited rules and regulato- ˜ ˜ Participants identified and Operated on the public Internet Operated on a system within a private network ˜ ˜ Access gained through ˜ ˜ Technology controls ˜ ˜ Exchange and user security ˜ ˜ Securities exist digital- join and transact pseudonymous ry oversight downloading software not subject to scrutiny ˜ ˜ If compromised, holder can unilaterally transfer cryptocurrency anywhere in a public network with licences to operate operation meet regulatory standards (e.g. KYC and AML) retained ly only within the ASX register ˜ ˜ Cash remains within bank- ing system Data integrity Enhanced data integrity ˜ ˜ Access to cryptocurrency ˜ ˜ Equivalent or better controlled by private keys ˜ ˜ Underlying technology has inspired new applications tailored for financial markets security of data (cryptography) ˜ ˜ Multiparty authentication and authorisation ˜ ˜ Creates a secure single source of truth Source: ASX 36 // TheTrade // Summer 2018 ˜ ˜ Could provide significant benefits to the industry