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Nasdaq, which has completed the first transaction through its digital ledger system, faces competition from Symbiont that claims to be the first company that started trading shares using blockchain.
On Wednesday, December 30th, 2015, Nasdaq announced that the first securities transaction was settled on its Linq platform. According to the company, the issuance of equity was carried out by the Chain startup to the unknown private investor.
Nasdaq introduced its blockchain-based trading platform, called Linq, during a Las Vegas conference in October. The company described the platform as the first of its kind, saying it would allow companies to trade shares even before going public.
“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,” Nasdaq said. “In addition to its equity management function, Nasdaq Linq also provides issuers and investors an ability to complete and execute subscription documents online.”
First announced in May, the platform was created in partnership with innovation company IDEO and blockchain technology provider Chain, which conducted the first transaction.
Chain’s CEO, Adam Ludwin, said the transaction “was seamless and met our objective of drastically reduced manual ownership transfer.”
“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 of 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 The implications for settlement and outdated administrative functions are profound.”
In the meantime, Symbiont’s representatives told the press that their company “was the first to issue securities using blockchain technology”, adding they unveiled the initiative in August 2015.
The company’s blockchain-powered platform, dubbed Smart Securities, enables companies to trade a wide range of financial assets. The applications for securities include syndicated loans, securitized instruments, private equity and corporate debt.
“Generically known as ‘smart contracts,’ these instruments are programmable versions of traditional securities issued on any type of distributed ledger, such as a Blockchain,” Symbiont stated in August. “Once a security is issued onto the ledger, it acts autonomously, eliminating traditionally manual mid- and back-office functions.”
The multiple benefits of the technology make banks and other financial institutions to realize its potential. Blockchain can help issuers to significantly accelerate securities trading settlement, which now takes up to three days in the US, as well as mitigate counterparty risks and reduce capital costs.