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Blockchain in Capital Markets ‘On the Cusp’ of Acceleration

Todd McDonald, co-founder of enterprise blockchain software firm R3, said the use of blockchain in capital markets is on the cusp of some really exciting developments.

Todd McDonald, R3

McDonald told Markets Media: “We need to ensure the technology is simple to use for institutional investors and that its why the collaboration with Nasdaq is important. They have experience running a regulated exchange and we are providing something additive to what is out there already.”

In April Nasdaq announced a long-term collaboration agreement with R3. The exchange’s Market Technology business will use Corda, R3’s enterprise blockchain software, to build full trade lifecycle solutions for digital assets marketplaces.

Johan Toll, head of digital assets, Market Technology at Nasdaq, said in a statement: “R3’s Corda platform will fit well into Nasdaq’s technology ecosystem and partnership strategy and allow us to harness the power of scalable design and a new level of interoperability.”

Nasdaq said the R3 collaboration will advance the exchange’s efforts in helping digital assets marketplaces strengthen transparency standards to align with their capital markets counterparts as they evolve their businesses.

Cathy Minter, chief revenue officer at R3, said in a statement: “Financial institutions are becoming increasingly aware of the huge potential for servicing the needs of digital assets. We can help them accommodate these assets with solutions that are designed for more secure, reliable and regulated environments.”

In June Nasdaq launched the Marketplace Services Platform which allows users to build new marketplaces across the trading lifecycle, from execution through to settlement, custody and payment, by using cloud-based plug and play components.

MarketPlace Services includes a Digital Assets Suite which is agnostic to the underlying digital ledger technology, is multi-cloud and will also be accessible for marketplaces in Microsoft’s Azure. Nasdaq is working with Digital Asset, R3 and Symbiont to deliver technology through the Marketplace Services Platform to meet the diverse needs and unique models of tokenized and digital assets marketplaces.

Magnus Haglind, Nasdaq

Magnus Haglind, senior vice president and head of product management, Market Technology at Nasdaq, told Markets Media in July: “We are working with firms such as R3 and the digital asset space has matured as vendors are moving into the next phase. We hope the number of partnerships will grow and create a broader ecosystem.”

McDonald also pointed to the Depository Trust & Clearing Corporation’s two projects to explore the benefits of digitalization in the public and private markets as being significant.

In May the DTCC unveiled two digital projects. Project Ion will explore accelerating settlement using distributed ledger technology and tokenized securities. Project Whitney is a prototype focused on exploring the potential for asset tokenization and digital infrastructure to support private market securities, from issuance through secondary markets.

McDonald continued that the two key metrics  for measuring Corda’s progress are volume and value. He said: “The level of progress is ramping up and tokenization is an area of big growth.”

He said the need to work remotely as a result of the Covid-19 pandemic has accelerated progress.

“The pandemic has shone a light on digital transformation which is in name only and incumbents have accelerated plans,” added McDonald.