Another day, another grisly story of changing markets, bank shrinkage and the constant news of likely job losses.
There's been some noise this week about firms becoming bored by brexit and actually starting to hire. Well, don’t order a Ferrari or a Porsche just yet, don’t mortgage up, and don’t promise your partner a life of security and ease. Here’s why - the markets are going digital.
A new technology called blockchain (you've all heard the name, but probably aren't registering what it's all about) is going to do to the markets what the internet and digital streaming managed to do to cinema, music, books, news dissemination and so on. A blockchain facilitates secure online transactions - it's a decentralized digital ledger that records transactions across many computers in such a way that the registered transactions cannot be altered retroactively. And the minute you are able to reduce something to a pure digital format, you can save a lot of time and money and create new markets and value - you also tend to employ a lot less folk while reaching huge audiences.
The implications of Blockchain roll-out offers a whole new way of doing things, including simpler and more transparent audit trails, better compliance, instant and transparent markets. The applications for both issuers and trading houses are potentially enormous. Already many trades under $1 million nominal are executed instantly over electronic platforms. Blockchain threatens to replace today’s platforms with more powerful engines.
A company called BlockEx, one of a handful embracing this new technology, is already at the point of reducing the syndication process and matching client interest with potential issuers. This allows for much swifter execution and effectively takes power away from bank syndicates. It makes for more efficient markets, placement and happier investors and issuers. But the banks - the former middle men - will end up being cut out (unless they buy the technology). Regulators will love it. For the markets as we know them, however, it’ll be the last nail in the coffin.
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