RegionsNorth AmericaNasdaq’s blockchain claim raises hackles

Nasdaq’s blockchain claim raises hackles

The North American exchange’s claim to have pioneered the first share sale based on the technology was swiftly challenged.

Nasdaq said it had completed the first share sale to use a system based on blockchain technology, although smart contracts platform Symbiont swiftly responded that it had beaten the North American exchange by four months.

A release from Nasdaq reported that Chain.com, a privately owned company that itself specialises in blockchain technology, issued shares to a private investor using the exchange’s new Linq system based on the digital ledger technology.

It added that the transaction created a digital record of share ownership “significantly reducing settlement time and eliminating the need for paper stock certificates”, and also enabling both issuer and investor to complete and execute share subscription documents online.

“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 Nasdaq’s chief executive (CEO) Bob Greifeld. “Through this initial application of blockchain technology, we begin a process that could revolutionise the core of capital markets infrastructure systems. The implications for settlement and outdated administrative functions are profound.”

Blockchain is a shared database technology that first gained attention as the platform used by Bitcoin and other crypto currencies. More recently, it has been taken up by several major banks and other financial institutions that see in its technology the potential for faster and cheaper payment systems and capital market transactions.

Nasdaq said that blockchain could accelerate the clearing and settlement of equity trades from the current standard of three days in North America and two days in Europe to no more than 10 minutes.

Symbiont, the developer of Smart Securities responded to the announcement with its own release, claiming that it was ahead of Nasdaq as the first to issue securities using blockchain technology. It cited its own share issue on the Bitcoin blockchain last August 2015, attended by 40 media and analysts in New York.

However the two offerings differ in that Symbiont issued its own shares using the Bitcoin blockchain, while Nasdaq’s proprietary Linq system was used by Chain.com to sell shares to a private investor.

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