3 Ways Blockchain Helps Capital Markets Overcome Challenges

Capital Markets CIO Outlook | Friday, August 28, 2020

The value of implementing blockchain in capital markets emanates from the technology's capability to help the sector overcome challenges that it has always faced.     

FREMONT, CA: Capital market firms are taking an interest in blockchain technology now. The potential that blockchain technology carries is now well-known across industries. When it comes to trading and investment companies, blockchain might prove all the more integral in transforming legacy processes. Outdated processes can be a real problem blocking potential growth in revenue. The intrinsic problems associated with the older methods of operation are particularly disadvantageous in today’s dynamic era. Technology providers are now building blockchain-based applications for the address the constraints that companies in capital markets face. A few ways in which blockchain can deliver value to capital market firms are listed below.

• Simplified Trading for Everyone

Blockchain allows the creation of digital tokens that bring a lot of convenience to trading. The digital securities are highly evolved from a trading perspective and entitle stakeholders to liquidate assets and securities without much human intervention. With retail brokers and dealers getting regulatory approvals, investors will enjoy the benefits and convenience of trading security tokens with unmatched amounts of flexibility. 

• Less Investment in Human Resources

The tokenization of assets and securities allows data to be embedded. So, capital market firms can easily incorporate regulatory rules into smart contracts that can self execute the trade. This allows companies to reduce the requirement of manual interventions in trading. With reducing manual interventions, the chances of errors reduce. Thus, blockchain can effectively lower risks and save costs for capital market companies while imparting unmatched speeds to trading.

• The Factor of Security

Given the features of blockchain, it is evident that using capital market firms can enhance security with tokenization. The immutable digital records of every transaction taking place in a decentralized manner make frauds of any kind highly improbable. Only involved parties have access to the tokens, making monitoring highly convenient as well.

Blockchain technology can revolutionize trading as we know it today and enable heightened levels of automation, security, and several other crucial functionalities.

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