ADX and SWIFT to work on blockchain project
SWIFT project with securities depositories will look at use of distributed ledger in securities processing
Abu Dhabi Securities Exchange (ADX) will participate in a project by financial network SWIFT, to look at uses of blockchain and distributed ledger technologies in post-trade scenarios.
ADX is one of seven central securities depositories (CSDs) who will work with SWIFT on the development of distributed ledger for use cases such as corporate actions processing, including voting and proxy-voting, as well as investigating new products based on distributed ledger and the standards to support this.
Last year ADX announced that it had implemented a blockchain-based solution for shareholder voting for companies listed on the Abu Dhabi market.
As a part of the MOU, SWIFT and the CSDs have defined the product requirements for an e-voting solution based on DLT that includes common standards (ISO 20022) and principles. SWIFT believes that distributed ledger technology can have benefits in securities processing, particularly in areas requiring multi-party contact, which involve extremely cumbersome manual processes that can carry significant inherent cost and risk,
"To ensure interoperability and smooth migration, it is crucial that new technologies support existing common standards such as ISO 20022," said Stephen Lindsay, Head of Standards at SWIFT. "The promise of the technology on paper is great, but it is currently missing a key component around standardisation. There is clear value in re-using established business definitions and facilitating interoperability amongst DLT implementations, which this project will demonstrate."
"As the first market in the MENA region to enter into an agreement of this kind, this signing marks another significant achievement for ADX," commented Rashed Abdul Karim Al Balooshi, Chief Executive, Abu Dhabi Securities Exchange. "The Exchange will open channels of constructive dialogue with various stakeholders to identify the common principals, standards and business rules needed for the successful implementation of DLT in post trade operations, with the aim of enhancing the speed and security of capital market transactions."
"This partnership is a great step forward and another example of how SWIFT and the industry can work together to solve concrete business challenges with an innovative and collaborative mindset. Blockchain technology is playing a transformative role in the financial services industry worldwide and we are excited to collaborate with different community players to reach significant milestones. SWIFT is always keen to be at the forefront of innovation in our industry and strive to offer the community the best solutions available," said Onur Ozan, Head of Middle East, North Africa and Turkey at SWIFT.
Other aspects of the MOU include fostering collaboration amongst the CSD community in DLT research and development, helping define the role of financial market infrastructure providers in markets based on distributed ledgers and; identifying, defining and developing additional use cases for DLT in a CSD environment and the post-trade landscape, such as services for different kinds of DLT-based digital assets.
In addition, the group will focus on creating and adapting common standards and principles for the use of DLT amongst CSDs and the financial industry, and promoting the adoption of those standards and principles to other parties, including regulators.
The central securities depositories (CSDs) participating in the project are Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd.