TradFi Study Shows DLT-Based Financial Markets Could Save $100B Annually

A prominent traditional-finance advocacy organization has released a report stating that the implementation of distributed ledger technology (DLT) in securities markets has the potential to generate savings exceeding $100 billion annually.

The Global Financial Markets Association (GFMA) has released a report on Tuesday evening, urging regulators to embrace the underlying technology of cryptocurrencies for improved collateral management, asset tokenization, and sovereign bond markets.

"Distributed ledger technology holds promise for driving growth and innovation," stated Adam Farkas, the Chief Executive of GFMA, an organization whose members include major players such as JPMorgan Chase, HSBC, and Nomura, with affiliates in the U.S., Europe, and Asia.

“This potential should not be ignored or prohibited where regulatory oversight and resiliency measures already exist,” Farkas added, calling for a harmonized international framework to let DLT-based markets link up.

The report suggests that unlocking collateral tied up in areas such as derivatives and securities lending has the potential to save more than $100 billion annually in financial resources within a market valued at approximately $19 trillion. Furthermore, employing smart contracts to automate settlement and corporate actions related to stock splits and mergers could lead to operational cost reductions of $15-20 billion, according to the report.

The study showcases a rising wave of enthusiasm among traditional financial participants for leveraging Distributed Ledger Technology (DLT).

Euroclear, a clearing and settlement firm based in Brussels, is on the verge of launching a new platform dedicated to DLT bond trading. Simultaneously, the European Central Bank is actively exploring ways to enhance the interoperability between its financial settlement systems and decentralized technology.

Source Coindesk