As exchanges and sell-side firms begin to design new distributed-ledger based markets, the buy side may be left out of the conversation, according to results of a recently published report on blockchain from industry research firm Greenwich Associates.

According to a survey of 137 global market participants, asset managers have lagged in their research and development investments.

“I’ve spoken to many buy-side firms anecdotally, and they would like to get more involved, but they are not sure what they should be doing and how they should be doing it,” said Richard Johnson, vice president, market structure & technology at Greenwich Associates and author of the report.“It seems like the exchanges and the sell side are deciding that they are re-redesigning markets and what the markets are going to look like. I would like to see the buy side get more involved since they are the people who own the assets ultimately.”

Approximately a third of the study’s participants have allocated $5 million or more to study distributed-ledger technology. However, only 14% of asset managers have invests that much compared to 60% of exchange operators and 19% of sell-side firms. The vast majority of asset managers, 71%, have budgeted $500,000 or less while another 14% invested between $500,000 and $1 million.

“It’s very much an arms race as it were and people need to get out and demonstrate it,” said Johnson. “The first company that can do that will gain a lot of momentum, be very successful, and define the market for everyone else.”

Johnson is unsure whether the industry will maintain its funding levels at this rate.

There were a lot of firms that already were working on proofs of concepts at the beginning of the year when the Greenwich Associates conducted its survey. “They’re getting their hand on it, rolling up their sleeves, and they are experimenting with blockchain,” he noted.

Johnson believes that the industry will get a better sense on funding as various proofs of concepts move into beta testing and limited production by the end of the year or the start of 2017.

“We will get more information from that stage of things to determine what ongoing budgets will look like,” said Johnson.

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