How Blockchain Contributes in Digitalizing Trading Platforms?

Capital Markets CIO Outlook | Thursday, August 27, 2020

The introduction of blockchain trading platforms allows capital market professionals to attract traders and investors to participate in trade.

FREMONT, CA: For various sectors, the blockchain technology has proved to be the game-changer. The capital market is one of those sectors that experience a complete shift of its business models from physical to digital platforms. As the capital markets deal with massive amounts of financial transactions and changing currency rates across that globe, the professionals tend to invest in all-around service providing technology-based tools and applications for their trading or investment institutes. Some of the benefits that blockchain technology delivers to the capital markets are listed below.

• Transparency

Blockchain-based interfaces or platforms allow both the professionals and customers of the capital market to maintain transparency. This technology helps the professionals to track every trade actions and share the information with their clients or customers. The trade actions like transaction status, issuance applications, dividend payout, and smart contract execution are provided standard security measures and are only authorized to specific individuals for accessing any information across the trade network.

• Liquidity

Blockchain technology offers the feature of tokenization that is tagged on every trade order with a unique number. This feature contributes to increasing liquidity by assigning fractional ownership and asset fungibility. This technology also enables small investors to participate in the trading platforms by lowering the barriers to entry and creating an associated liquidity premium that increases asset value.

• Accessibility

High accessibility to participate in the trading network requires digital platforms or interfaces that can flexibly perform regardless of the different time zone in different locations. Blockchain-based digital exchanges increase market access and eliminate the rigid schedule that limits the time and place of trading.

Blockchain-based trading platforms allow the professionals of the capital market to take benefits like digitalization and securitization of the trading assets.

Financial