Switzerland’s Leading Stock Exchange to Replace Current Trading System with Blockchain
SIX Swiss Exchange, one of the leading stock exchanges in Switzerland, is hoping to replace its current trading platform with a blockchain-based system that the company is currently working on, Reuters reported on November 13, 2018.
Swiss Exchange Six Expects Blockchain-Platform to Rule in Ten Years
Swiss exchange SIX, the oldest exchange in the country and the first exchange in the world to incorporate automated trading, is leading the way when it comes to blockchain adoption.
According to a November 13 report from Reuters, the company expects its traditional trading platform to be overtaken within a decade by an alternative it is launching that will be based on blockchain technology.
Even though stock and bond dealing on SIX and most other exchanges are all done digitally, then the underlying processing steps are often based on old protocols of paper and post. SIX Digital Exchange (SDX) is scheduled to launch in mid-2019 and initially run parallel to the existing SIX platform, which involves three steps to complete a purchase or sale of securities, a process that often takes several days.
Transactions done on the new SDX platform will make two of the three labor-intensive steps vanish into a blockchain distributed ledger, meaning that transaction could be completed in fractions of a second.
SIX’s New Platform an Answer to Threats Posed by Startups
According to Thomas Zeeb, SIX’s new platform is an answer to the fast-paced changes in the market. Zeeb said that it was just a matter of time before brokers, bans, insurance companies, and significant asset managers saw the advantage of the lower cost and better efficiency of blockchain platforms, and SIX decided to jump into it before the competition.
Although many other exchanges, such as the Deutsche Boerse, are working on similar blockchain projects, Zeeb said that the SDX is the Swiss stock exchange’s reaction to threats posed by startups.
“They are pushing into our business and especially the banks. That’s a big danger,” he said, adding that startups that offer blockchain-based platforms could easily bypass banks or stock exchanges completely.
Reuters pointed out that the boom in cryptocurrencies brought blockchain technology to light, bringing millions of customers to Coinbase in San Francisco and Hong Kong-based Binance.
SIX’s new platform will have to wait for government clearance before it can go live, though, which means that there might be a short opening for competitors to jump in. The company still needs to clarify legal issues with the Financial Market Authority watchdog and the Swiss government.
If all of the legal issues surrounding SDX are resolved, the company will start by offering to trade in selected stock. Zeeb told Reuters that selected stocks would be followed by other stocks and later bonds and possibly exchange-traded funds, adding that even assets that are not securities, such as paintings or vintage cars, could one day change hands on SDX.