Time was when you had to wait almost a month for your share
certificates to arrive by post. With progressive technological advances, that
time has come down to 2 to 3 days with the physical certificates replaced by digital
records in central depositories. However, the monies or securities need to be
tendered beforehand and then the settlement occurs after 2-3 days. The investor loses out on the intervening interest. Some of
the brokerage houses, including ICICI securities, have more aggressive practices and
deduct the monies or securities a day prior to that stated.
The blockchain technology promises to revolutionize the
existing practices. Alongwith real-time trade settlement,
blockchain can cut down on the brokerage charges by eliminating/ reducing middlemen
charges. This would be a great boon for traders and investors with immediate
settlement of trades at significantly reduced costs.
At a time when investors
are moving more towards index funds, it makes sense for brokerages to adopt newer technologies and slash
their charges or risk losing out on the brokerage altogether. What time cannot do competition and technology have done.
ICICI Bank recently concluded a trade finance transaction
using a private blockchain technology co-developed with EdgeVerve Systems. Nasdaq
has already started experimenting with this system in private trading platforms
in 2015. There are numerous instances across the world of successful implementation of this technology. It is time to systematically study and extend the use and benefits of blockchain
technology to retail stock trading platforms.
No comments:
Post a Comment