NEX empowers markets on behalf of the financial technology industry, operating across the entire transaction cycle. A recent report has identified that the use of ledgers improve market efficiency in being able to record how financial, physical and electronic valuables are shared across a network based on transparent information updates.
Types of trading in the financial markets
Trading in the financial market is split into two groups: business-to-business (B2B) and business-to-consumer (B2C). Business-to-business trading is often conducted on an exchange basis. This is where a large investment bank or broker will trade with each other whereas business-to-consumer trading occurs when retail clientele buy and sell from brokers. Brokers act as the ‘middle-man’ between clients and business markets.
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Blockchain
The first of its time was released in 2008. The purpose of ‘blockchain’ was to support online cash systems, such as Bitcoin; a form of digital currency created to regulate units of currency and approve the transfer of funds without a central administrator. Since then, technology has evolved so that a number of models are available, all of which can be applied to different business problems to act as the solution and improve how information is shared. This technology provides the government with new tools used to reduce fraud and human error. It has the potential to guarantee ownership and source of intellectual property.
Benefits of electronic trading
The main benefits of electronic trading within the markets now involve dealers being permitted to expand their investor clients and as a result, reduce the fee combined with trade cancellations and alterations. This has led to the market performing more efficiently and fairly. Automated processing has also reduced the amount of trade errors. As a result, this has cut the attributed expenses to action the corrections.
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A number of new recommendations have been made and suggest the new focus should revolve around leadership, research, standards and the requirements of proof used to undertake a concept trial. Some involve the government providing ministerial leadership to ensure it provides the leadership and platform required for distributed ledger technology to be successful. This establishes trials of distributed ledgers to identify the purpose of use in the public sector. Other suggestions involve the UK research community investing in thorough research to provide the function to ensure that all distributed ledgers are measurable and secure to ensure proof of data in the contents can be provided efficiently, as required.
Matt Hancock, Minister for the Cabinet Office and Paymaster General, is keen for digital transformation to continue to be a central part for the reform of the public sector to help deliver a better service, at a lower cost. This will help improve the relationships between citizens and the state with the opportunity to experience the full advantages of distributed ledger technology.
