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ESMA Reported Challenges in Linking Blockchain with Existing Systems

The European Securities and Markets Authority (ESMA) said that there would be technical challenges in linking new blockchain technology with existing systems and networks in the securities market. ESMA has opened a consultation with industry and other stakeholders seeking views on how blockchain or the broader category of distributed ledger technology (DLT) could be applied to securities markets and what the potential benefits, risks and challenges would be in its use. The consultation closes on 2nd September 2016.

Whilst ESMA said blockchain technology could help speed up the clearing and settlement of financial transactions, record ownership of assets and support regulatory reporting, among delivering other benefits, it also warned about addressing technological issues to make the organizations in the securities market to be realized the potential of blockchain. The interoperability of blockchain technology with other systems was highlighted as potential barrier to its use. ESMA also reported that the deployment of DLT could raise fair competition issues and raised questions over whether blockchain could be implemented on a large scale or not.

News Characteristics

Date : Jun 03, 2016
Region : Europe
Industry : Financial Service Providers
Function : Operations and IT
Sub-Function : IT Modernization/Transformation