Blockchain Technology Can Transform Trading, Says SEBI Chief

Blockchain Can Transform Trading
Dashmeet Kaur
| Updated: Nov 07, 2019 | Category: SEBI Advisory

Blockchain technology can be a stepping stone in the advancement of the trading industry. In a recent event of commemorating the silver jubilee of the National Stock Exchange (NSE), the chief of Sebi urges stock exchanges to follow governance norms better than what they already preach to the listed companies. He also emphasises on the prohibition of using their oligopolistic position to charge excessive and unreasonable fees from investors. Moreover, he acclaims about the prospective of blockchain technology transforms the trading.

Highlights of the Whole Story

Here is an abstract covering all parts of the story to give you a precise picture of what happened in the event:

  • On Tuesday Sebi chief, Ajay Tyagi[1] urged stock exchanges to follow governance norms better than what they currently preach to the listed companies.
  • He said that stock exchanges should not use their oligopolistic position to levy unreasonable fees from the investors.
  • The event happened during the silver jubilee of the National Stock Exchange (NSE). It has become a market leader since its inception and controls two-thirds of volumes by distorting the position of  144-year-old BSE with its electronic screen-based trading terminals in 1994.
  • In the event, enough prominence has given to the technology and how it can do wonders.   Technology has made Algo trading possible, T+2 days settlements and holding securities in electronic format among many other things. Even in the future, too, technology shall continue to transform capital markets.
  • Ajay Tyagi affirmed that blockchain technology transforms the trading by saying that it has the potential to revamp the process of trading, settlement & clearing.

 He said: “The fund management industry that has already taken the initial step with Robo advisory services, can look very different in future with the adoption of Artificial Intelligence & Machine Learning.”

  • Besides this, the chief of Sebi also underlines the role of exchanges in governance. Tyagi states that the “Exchanges need to follow governance norms better than what they preach to the listed companies. While are for-profit commercial entities, they must refrain from using their oligopolistic position by putting out exorbitant fee structures.”

Overview of Blockchain Technology transforms the trading

In the event, Ajay Tyagi highlights the need to employ blockchain technology in regulatory functions of the trading sector. He said that the technology had played a significant role in transforming capital markets til now, and has a bright future in the same. From Algo trading, settlement in T+2 day, accessible security flows/ foreign fund to e-holding of securities, everything becomes possible because of technology. He also shared his views on the exchanges and capital market conditions, as mentioned below:

  • He said that an amount raised from the capital markets showcases the development in the economic zone.
  • A survey indicates India’s market conditions where India has the capitalization to GDP of 78% which was far below from many developed countries of the USA and Japan that has a GDP of 150% and 120% respectively.
  • In the past two years, the amount raised through capital markets reckons around `9 lakh crore a year, of which 70-75% is in debt securities, and 25-30% is in equity. Such amount is comparable to incremental trade disbursed by banks during this period. It demonstrates the growing clout of capital markets, Sebi Chief added.
  • Further Tyagi states that exchanges are the first level of regulation and that they have to be“above board” since they have the highest integrity in contrast to the brokers and entities.
  • The markets regulator accentuates on the development of a robust bond market. He said that the area requires a unified approach among regulators in the development of bond markets.
  • Also, considering the NPA (non-performing assets) position of banks, it calls for an urgent need to develop this market so that entrepreneurs have an alternate route to raise funds.

Final Verdict

Many Entrepreneurs has availed the benefits of blockchain technology and enhanced their businesses. This advanced technology provides tight security, greater transparency, improves traceability, increases the speed of transactions at minimal costs. So one can foresee that the blockchain technology transforms the trading system.


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