Currencies

Dollar rises as markets turn eyes to Opec

European bourses are mirroring a tentative Asia session as the dollar continues to be supported by better US economic data and investors turn their attention to a meeting between Opec members. Sentiment is underpinned by US index futures suggesting the S&P 500 will gain 3 points to 2,207.3 when trading gets under way later in […]

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Banks

Basel Committe fail to sign off on latest bank reform measures

Banking regulators have failed to sign off the latest package of global industry reforms, leaving a question mark hanging over bankers who complain they have faced endlessly evolving regulation since the financial crisis. Policymakers had hoped to agree the contentious new measures at a crunch meeting held in Chile this week, but a senior official […]

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Financial

Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

Builders’ merchant Travis Perkins and mining company Polymetal face relegation from the FTSE 100 after their recent performances were hit by political events. The share price of Travis Perkins has dropped 29 per cent since the UK voted to leave the EU in June, as economic uncertainty has sparked concerns among some investors about the […]

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Economy

Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

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Financial

Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

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Categorized | Equities, Financial

Nasdaq sells shares using blockchain


Posted on December 30, 2015

A man works at the NASDAQ exchange in New York City©Getty

Nasdaq claims to have broken new ground on use of blockchain with a share sale on Wednesday that used a system based on the technology.

The blockchain is the shared database technology that initially gained notoriety as the platform for bitcoin and other crypto currencies. But many large financial groups are now seeking to use its technology to make payment systems and capital market transactions faster and cheaper.

    It works as an electronic ledger of digital events that uses cryptography to continuously verify “blocks” of records and then distribute them among parties to the transactions.

    The enthusiasm around blockchain on Wall Street has been so intense that Nasdaq’s announcement prompted a scuffle over who owns the bragging rights to the first share sale using blockchain.

    Nasdaq said Chain.com, a privately owned company that itself specialises in blockchain technology, had issued shares to a private investor using the US exchange’s new Linq system that is based on the digital ledger technology.

    The exchange group said the transaction had created a digital record of share ownership — “significantly reducing settlement time and eliminating the need for paper stock certificates”. It also allowed the issuer and investor to complete and execute share subscription documents online.

    Bob Greifeld, chief executive of Nasdaq, said: “We believe this successful transaction marks a major advance in the global financial sector and represents a seminal moment in the application of blockchain technology.”

    But Symbiont, a start-up backed by trading veterans including Duncan Niederauer, the previous chief executive of the rival New York Stock Exchange, hit back, claiming it issued the first securities using blockchain technology in August.

    Symbiont issued its own shares using the bitcoin blockchain while a privately held company used Nasdaq’s proprietary blockchain network to sell shares to a private investor.

    Nasdaq said the blockchain technology could significantly speed up the clearing and settlement of equity trades from the existing standard of three days in the US and two days in Europe to as little as 10 minutes.

    Supporters of blockchain technology argue that near-instantaneous settlement of transactions can transform the financial system by automating the clunky back offices of banks. This could also free up billions of dollars that banks and others must hold as collateral to insure against things going wrong while a trade is being settled.

    However, despite a plethora of industry consortiums, no widely-used financial product has yet been switched to blockchain technology.

    Mr Greifeld said: “Through this initial application of blockchain technology, we begin a process that could revolutionise the core of capital markets infrastructure systems. The implications for settlement and outdated administrative functions are profound.”

    The technology could cut banks’ infrastructure costs for cross-border payments, securities trading and regulatory compliance by $15bn-$20bn a year from 2022, according to a recent report by Spanish bank Santander, management consultancy Oliver Wyman and venture capital investor Anthemis.

    Other groups are also turning their attention to bitcoin and its technology. The NYSE this year launched the first exchange-calculated and distributed bitcoin index. In January, NYSE made a minority investment in Coinbase, a bitcoin wallet and platform.

    Blythe Masters, the former JPMorgan banker who helped develop the idea behind credit default swaps, has joined a group of trading executives setting up a venue that will convert buyers and sellers of financial assets into bitcoins, thus cutting settlement times.