Nasdaq says that an issuer was able to use its Nasdaq Linq blockchain ledger technology to successfully complete and record a private securities transaction – the first of its kind using blockchain technology. Chain.com, an inaugural Nasdaq Linq client and blockchain developer, documented its issuance of shares to a private investor using Nasdaq’s blockchain-enabled technology. This transaction represents a major advance in the application of blockchain technology for private companies.
For this transaction, Nasdaq enabled the issuer to digitally represent a record of ownership using Nasdaq Linq, while significantly reducing settlement time and eliminating the need for paper stock certificates. In addition to its equity management function, Nasdaq Linq also provides issuers and investors an ability to complete and execute subscription documents online.
Nasdaq’s use of blockchain technology also holds promise for expediting trade settlement for transactions in public markets. Blockchain technology has the potential to assist in expediting trade clearing and settlement from the current equity market standards of three days to as little as ten minutes. As a result, settlement risk exposure can be reduced by over 99 percent, dramatically lowering capital costs and systemic risk. In addition, this technology could allow issuers to significantly lower the risk and the administrative burden of what is largely a manual and multi-step process today.
“We believe this successful transaction marks a major advance in the global financial sector and represents a seminal moment in the application of blockchain technology,” said Bob Greifeld, CEO, Nasdaq. “Through this initial application of blockchain technology, we begin a process that could revolutionize the core of capital markets infrastructure systems. The implications for settlement and outdated administrative functions are profound.”
“No doubt this is a powerful milestone for Chain and our partnership with Nasdaq,” said Adam Ludwin, CEO, Chain.com. “We couldn’t be happier with the results of the transaction. It was seamless and met our objective of drastically reduced manual ownership transfer.”
In November, Nasdaq announced that it is exploring the application of its blockchain technology to proxy voting in Estonia. Further progress with Nasdaq’s enterprise-wide blockchain initiatives is expected to be announced in 2016.