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Home » Is it possible for blockchain to transform the management of digital securities for stock exchanges?
Is it possible for blockchain to transform the management of digital securities for stock exchanges?
Is it possible for blockchain to transform the management of digital securities for stock exchanges?
Blockchain

Is it possible for blockchain to transform the management of digital securities for stock exchanges?

04/08/20243 Mins Read
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The Athens Stock Exchange (ATHEX) is embarking on an innovative journey in the financial world by integrating blockchain technology into its Electronic Book Building (EBB) system. This move, announced in early March, is a collaborative effort between ATHEX and the Sui blockchain ecosystem. The aim is to transform securities into digital certificates, enhancing security, efficiency, and transparency for users.

Traditionally, the primary issuance process involves separate confirmations for securities allocation and settlement. However, by integrating blockchain, ATHEX simplifies this process by merging the confirmations into a single, streamlined confirmation. This not only speeds up transactions but also improves efficiency for the exchange, its members, investors, and issuers looking to raise capital.

Cointelegraph had the opportunity to speak with a representative from Sui to gain further insight into their collaboration with ATHEX and how blockchain technology is revolutionizing operations in the traditional finance sector.

Enhanced security and transparency are key motivators for integrating blockchain technology into a highly sensitive network like a stock exchange. Dealing with billions of dollars on a daily basis, ATHEX recognizes the need for a significant security boost. Blockchain transactions, with their inherent digital certificates, provide an advanced layer of security. Furthermore, being on a public, immutable ledger helps eliminate the risk of manipulation, a persistent challenge in traditional finance.

The transparency offered by blockchain extends to regulatory oversight as well. Regulators can easily monitor trade activities for suspicious behavior, thanks to the immutable, public ledger reflecting trades. The Sui spokesperson highlighted the benefits of this transparency, stating that it simplifies regulators’ ability to detect suspicious transactions or improper allocations. This use case is particularly useful in decreasing the risk of primary issuance and increasing the overall efficiency of capital raising, price formation, and transparent allocation.

ATHEX’s new tool, the EBB, is being developed to facilitate future fundraising. It will allow early-stage and mature companies to list transferable securities. According to the Sui representative, ATHEX’s EBB puts it at the forefront of innovation compared to other exchanges around the world. The successful relaunch of ATHEX’s corporate bond market with significant oversubscription and retail demand demonstrates the effectiveness of the EBB.

When implementing blockchain in a project of this scale in the traditional financial market, it is crucial to prioritize the speed, security, and fees of the chosen blockchain network. Sui recommends considering these factors to ensure a successful integration.

While ATHEX is leading the way in implementing blockchain with its EBB tool, other global stock exchanges have also been exploring the Web3 space. The London Stock Exchange (LSE) recently announced its intention to consider applications for Bitcoin and Ether cryptocurrency exchange-traded notes (ETNs) during the second quarter of 2024. This Web3-friendly approach from LSE could indicate a larger trend in the traditional finance sector.

Overall, ATHEX’s integration of blockchain technology into its EBB system marks a significant step forward for the financial world. With enhanced security, efficiency, and transparency, ATHEX is positioning itself as a trailblazer in the industry.

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