SIX, Nasdaq Partner on Blockchain
Magnus Haglind, head of product management in the market technology division of Nasdaq, said SIX Swiss Exchange’s testing of a distributed ledger shows that the technology is mature enough to be validated by businesses.
SIX and Nasdaq, together with technology partner Chain, will provide distributed ledger technology for the Swiss venue’s over-the-counter structured products.
Haglind told Markets Media: “SIX will run a full scale test in the fourth quarter with real clients and real flows in parallel with the current system. DLT is mature enough that we can discuss applications and workflows rather than the underlying technology.”
In October 2016 Nasdaq and SIX Swiss Exchange extended their current technology contract, which includes technology for trading other products, as well as market surveillance and pre-trade risk management. Haglind said similar DLT projects with other technology clients are in the pipeline.
Nasdaq participated in the development of the Chain Open Standard though a variety of use cases, including private market securities, proxy voting and clearing. Chain Open Standard is an open source blockchain protocol for high-volume financial applications to run on permissioned networks while meeting regulatory requirements,
The new blockchain will integrate with, rather than replace, several systems currently used by SIX through the Nasdaq Financial Framework, the exchange’s core infrastructure for delivering technology.
The Nasdaq Financial Framework was launched in 2016 so clients, such as exchanges, clearinghouses and central securities depositories, can easily integrate business applications, such as settlement, with new technologies such as blockchain. As a result, Haglind said the SIX test will include the settlement of both securities and cash.
“SIX is not replacing its system but looking to improve automation over time and make back offices more efficient,” added Haglind. “For example, DLT allows instant settlement but that is too disruptive to banks so SIX will use the industry standard and then move gradually to real-time.”
Haglind said Nasdaq had won a competition to develop this platform after a request for proposal from SIX. He said: “SIX is a good partner as it has a measured view of technology innovation in its network and with clients. So this is the perfect set-up.”
Chris Landis, division chief executive SIX Swiss Exchange, said in a statement: “We are always keen to explore innovative technologies which could serve as a basis for a wider commercial offering.”
In October 2016 SIX Securities Services, the post-trade infrastructure operator for the Swiss financial sector, announced plans to develop a proof of concept for commercial viability of distributed ledger technology with Digital Asset Holdings, the DLT provider led by Blythe Masters.
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