Stock Side View: Block Chain Will Play An Important Role In Stock Trading.

Two months ago, Goldman Sachs said that from finance to real estate, block chain technology would subvert everything. Now Goldman Sachs has reported that introducing block chain technology to stock trading can not only reduce errors in trading settlement, but also save the world $6 billion a year.

Goldman Sachs analyst James Schneider and others wrote in the report:

By reducing repeated spanactions and the need for manual confirmation and coordination among buyers, brokers, trusteeship lines and the American Depository Trust and Clearing Corp (DTCC), we believe that block chain technology will save us $2 billion per year (explicit and economic costs) in the US.

Globally, if the cost is proportional to the market value of the stock market, the cost savings may exceed $6 billion a year.

Goldman Sachs said that the implementation of stock trading instructions is relatively simple, and the settlement and liquidation links after spanaction instructions are quite complicated.

Goldman Sachs listed the trading process of the US stock market:

The report says that the implementation of stock trading instructions will not be affected. Block chain technology Impact, because the characteristics of price discovery, opponent matching and anonymous spanactions continue to exist, the current instruction execution process has also been quite efficient.

In the process of clearing and clearing stock spanactions, block chain technology can reduce or even eliminate spanaction errors, and optimize the background process and shorten the settling time.

Goldman Sachs estimates that Stock trading volume About 10% of them need a certain degree of manual intervention, and if we introduce block chaining technology, this is totally unnecessary. Goldman Sachs said:

By introducing the protocol at the start of the spanaction, the block chain can eliminate some of the most common problems and errors after the spanaction, such as the wrong settlement instructions and account / instruction details.

At present, these details are confirmed by multiple participants (DTCC, trustee bank, broker and customer) at multiple time points throughout the spanaction cycle. If block chaining can be fully applied to these participants, many of them can be packaged into intelligent protocols, thus becoming a requirement before spanaction instructions are executed, rather than in the case of spanaction After that, a number of participants are required to verify and agree.

Morgan Stanley also expressed the same view at the end of last month. Morgan Stanley analyst Huw van Steenis said in a report that the excitement of block chain technology is very reasonable, but the current fry is a bit overdone, and this technology has a long way to go to achieve large-scale application.

Some of the misunderstandings of the outside world may exaggerate the disruptive innovations brought by block chain technology, he said.

We expect that financial institutions and their customers will be able to verify the concept of asset block chain technology one by one in the next 2-5 years, but the whole iteration process may last for decades.

Despite these assumptions, Goldman Sachs also said that the technology of block chaining must be truly popular in areas such as financial regulation.

Goldman Sachs said it expects that in the next two years, there will be an early application prototype for block chaining technology, which will be used in a small market within 2-5 years, and will be widely used in 5-10 years, and the US stock market to be regulated will take up to 10 years.

We believe that in a relatively short period of time, consumer oriented shared economy and social media companies may take the lead in adopting identity based identification and credit management systems based on block chain technology.

In the capital market, a series of early prototypes will appear in the next two years. In view of the regulatory requirements and large number of participants in the large market such as the US stock market, the technology of block chaining to be accepted by the market within a larger range may take up to 10 years.