Post-Trade Clearing & Settlement Processing Optimization: An Opportunity for Blockchain?

Most of the previous decade in the capital markets space has been spent on optimizing the efficiency and speed of the pre-trade processing. Pretty much all of today’s stock exchanges are extremely efficient centralized electronic marketplaces running fully computerized order-matching engines, with ability to receive and process tens of thousands of buy/sell orders per second. As a result, they generate hundreds of millions of trades per day. The underlying order processing latencies are already measured in nanoseconds. Highly computerized algorithmic trading was the main driver for this type of technological innovation.

Despite the fact that buy and sell orders can be rapidly processed, booked and matched on a stock exchange, the actual clearing and settlement—including delivery of the underlying security asset (to the buyer) and actual payment (to the seller)—are still measured in days. The current post-trade processes are perceived as highly complex, slow, expensive and inefficient—and as such, in dire need of optimization and streamlining that is ripe for technology disruption.

Business case for faster post-trade processing

It is important to understand the reasons for making the clearing and settlement processes faster and more efficient. More efficient and fas ...

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