Nasdaq, Inc. (NDAQ) and Citi (C) Treasury and Trade Solutions are partnering for an integrated blockchain payments solution, which is set to be a landmark in the commercial application of blockchain technology. The announcement was made at CoinDesk’s third annual blockchain technology summit - Consensus 2017. The partnership between Citi and Nasdaq leverages Chain’s blockchain platform, Chain Core.
Chain and Citi have worked together to launch Citi’s new service – CitiConnect for Blockchain which assimilates its payments capabilities with blockchain networks, which in this case is Nasdaq’s private market exchange – Nasdaq Linq. A series of payment transactions have been made using Citi’s automated processing of cross-border payments (WorldLink) via a link between the CitiConnect for Blockchain and Nasdaq Linq.
The partnership will provide a seamless end-to-end transactional process for private securities. It will allow access to global payments using CitiConnect for Blockchain and WorldLink payment services via Nasdaq Linq platform. WorldLink payment service is Citi’s transaction solution for cross-border, multicurrency payments. The real-time visibility of transactional activity on the blockchain ledger will result in enhanced operational efficiency and ease of reconciliation.
In June 2015, Nasdaq announced its partnership with Chain to leverage the blockchain platform to facilitate the secure issuance and transfer of shares of privately-held companies. Later in December 2015, Nasdaq successfully completed and recorded private issuance of shares by Chain to an investor using Nasdaq’s blockchain technology. Nasdaq and Citi are founding members of IDEO CoLab since 2015 and are among industry leaders to invest in Chain, Inc. during its equity funding round that raised $30 million in September 2015.
Banks have been among the first to look at the benefits of the cost advantages and efficiency that this technology offers them. Blockchain technology can also help shorten the time involved in trade settlement. The current system involves T+3 days (stocks, corporate bonds, municipal securities and mutual funds shares) while a few require T+2 (foreign exchange settlements) or T+1 (treasury bonds) days. Institutions have been working on methods to condense the time consumed in the process and hence decrease counter-party risk. Blockchain-based smart contracts are being experimented with to provide a solution. Goldman Sachs has filed a patent application for a “cryptographic currency protocol”- based settlement system for the securities market. (Related reading, see: Blockchain: The Backbone of Finance's Entire Future)
In mid-2016, a report from Greenwich Associates estimated that technology providers and financial services firms from around the world will spend more than $1 billion during the year in the race to bring blockchain to capital markets. Further, a report titled Top Market Structure Trends to Watch in 2017 - reinstated that the distributed ledger technology, or blockchain isn’t over-hyped while predicting that, “In 2017, we will finally start to see the rubber meet the road, with talk converting to real implementations.”