Russian, South African CSDs Collborate to Explore Blockchain Technology

By
Olusegun Ogundeji
October 1, 2016

South Africa’s Central Securities Depositories (CSDs) Strate has signed a Letter of Intent with Russia’s  National Settlement Depository NSD at the Sibos event in Geneva in September 2016 to forge a partnership that will develop solutions utilizing blockchain – or the Distributed Ledger Technology (DLT).

The first use case is focused on proxy voting which is a vital process for decision-making bodies to delegate their voting power to other members of the same body to vote in their absence, and/or to select additional representatives.

Such processes are crucial to financial markets particularly in the securities settlement and custody industry which CSDs and NSD represent. Hence, their collaboration to create a distributed ledger that settles securities transactions has been seen as such that will develop innovative solutions for the benefit of the financial market.

The blockchain potential to revolutionise the financial markets and fundamentally create a paradigm shift has raised the need for financial market infrastructures to embrace the technology and identify opportunities that will add value to their current clients.

The chairman of the NSD executive board, Eddie Astanin, said they have began research and initiated new developments since 2015 since they believe that the securities settlement and custody industry is one of the promising sectors where new technologies can be used. “I think that post-trading may become the starting point of transition of the distributed ledger technology and blockchain from theory to practice,” he said adding that fast development of technologies and the huge number of startups that enter the market every month is a challenge and there is a need to be one step ahead of everyone else.

“I think that post-trading may become the starting point of transition of the distributed ledger technology and blockchain from theory to practice,” he said adding that fast development of technologies and the huge number of startups that enter the market every month is a challenge and there is a need to be one step ahead of everyone else.

He also said that only the united efforts of the largest players in the industry will enable them to respond to new challenges and integrate new technologies.

The CSDs and NSD relationship will enable both parties to explore opportunities for mutual cooperation in the post-trade settlement arena in the areas of information sharing regarding standards, regulations and DLT technologies; exploration of solutions that are of mutual benefit to both CSDs;and potential cost savings through the sharing of technology and development costs.

Featured image from iStock.

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