A study found that about 88% of financial market participants are interested in adopting distributed ledger technology (DLT), and 21% of them also believe blockchain will be core to a shortened settlement cycle.
The annual report from Citigroup, the largest international financial conglomerate, showed a high degree of interest in blockchain technology among securities market participants.
The study by Citigroup is based on a survey of over 300 financial institution representatives from 12 financial market infrastructures (FMIs). Brokers, asset managers, custodians, and institutional investors from around the world took part in the survey.
Citigroup analysts estimated that around 88% of respondents stated that their organizations are exploring options for using digital assets and blockchain technology. 54% said a DLT-based market infrastructure could cut post-trade processing costs by 10-30%. And 21% expressed confidence that blockchain will be core to the transition to a T+1 settlement cycle.
According to Okan Pekin, Global Head of Securities Services at Citi, blockchain technology could be the foundation for a new financial market that is significantly more efficient and cost-effective than traditional markets.
Citigroup also found that 92% of respondents were positive about the possibility of tokenization of physical assets. At the same time, respondents believe that tokenization will improve market liquidity and diversify the assets available for trading in the market.
Another 79% estimated the possibility of atomic settlement transactions in the next ten years. Blockchain is used to optimize the costs associated with clearing and settlement of traditional securities transactions.
As a reminder, blockchain technology is attracting attention not only from financial market participants. For example, DLT is actively being implemented in gold mining, real estate, agriculture, and the cotton sector.
