Abs­tract

Dis­tri­bu­ted led­ger tech­no­lo­gy (DLT) is a data­ba­se archi­tec­tu­re which enables the kee­ping and sha­ring of records in a dis­tri­bu­ted and decen­tra­li­zed way, while ensu­ring its inte­gri­ty through the use of con­sen­sus-based vali­da­ti­on pro­to­cols and cryp­to­gra­phic signa­tures. In prin­ci­ple, DLT has the poten­ti­al to redu­ce cos­ts and increase the effi­ci­en­cy of secu­ri­ties sett­le­ment, the ulti­ma­te step of every secu­ri­ty tran­sac­tion. In this paper, we first exami­ne to what ext­ent DLT could add value and chan­ge secu­ri­ties sett­le­ment. We then cha­rac­te­ri­ze the inno­va­ti­on pro­cess in the post-trade indus­try and final­ly, we descri­be the eco­no­mics of a hypo­the­ti­cal DLT-based secu­ri­ty sett­le­ment indus­try. Our main con­clu­si­ons are that: i) DLT has the poten­ti­al to impro­ve effi­ci­en­cy and redu­ce cos­ts in secu­ri­ties sett­le­ment, but the tech­no­lo­gy is still evol­ving and it is uncer­tain at this point what form, if any, a DLT-based solu­ti­on for secu­ri­ties sett­le­ment will ulti­m­ate­ly take, ii) tech­no­lo­gi­cal inno­va­ti­on in the post-trade indus­try is more likely to achie­ve its poten­ti­al with some degree of co-ordi­na­ti­on which could be faci­li­ta­ted by the rele­vant aut­ho­ri­ties, and iii) if DLT-based secu­ri­ties sett­le­ment beco­mes a rea­li­ty, then it is likely to be con­cen­tra­ted among few pro­vi­ders which, in the absence of regu­la­ti­on, could result in inef­fi­ci­ent monopoly

Quel­le: The eco­no­mics of dis­tri­bu­ted led­ger tech­no­lo­gy for secu­ri­ties settlement