World Federation Of Exchanges To Establish DLT Working Group

On July 17, 2017, The World Federation of Exchanges (WFE) announced it will be establishing a working group focused exclusively on Distributed Ledger Technology (DLT) and FinTech. The purpose of the group is to share intelligence, develop standards, and provide technical guidance to policymakers and regulators. The group will focus on key areas where exchanges and Central Counterparties (CCPs) see promise and potential in DLT such as:

  • Replacing legacy systems in a way that incorporates DLT;
  • Offering new products and applications to market participants and others on a commercial basis;
  • Deploying DLT to improve the efficiency of existing systems;
  • Deploying DLT in markets, segments or products where sophisticated post-trade infrastructure and processes do not yet exist

The WFE represents more than 200 market infrastructure providers, of which over 100 are CCPs and Securities Depositories (CSDs), and roughly 45,000 listed companies, including Nasdaq. The Federation made the announcement in a nine-page response to the UK Financial Conduct Authority's (FCA) April 2017 DLT Discussion Paper, and WFE’s CEO, Nandini Sukumar, sees great opportunity:

"Regulators can enable innovation while ensuring investor protection and the safety of markets. We also believe that the technology focus is widening beyond DLT and FinTech to areas such as cloud computing, AI, big data and robotics. The UK is amongst the global leaders in FinTech and the FCA itself has a track record of nurturing an innovation-friendly supervisory environment. As the global industry body for exchanges and post-trade infrastructure, the WFE therefore welcomes the opportunity to feed into the FCA's thinking on DLT."

The WFE states it is exploring how DLT can better optimize processes and efficiency in the exchange and CCP ecosystem. As a result, the Federation explains that members are developing proofs of concept, pouring venture capital into promising FinTech initiatives, and integrating into industry consortiums.

According to the WFE, a global consensus on DLT use can improve processes and efficiency within exchanges and CCPs. As a result, the WFE has been extremely proactive in establishing a basis for DLT over the past year. In August 2016, the WFE, together with committees within the International Organisation of Securities Committees, published the results of a survey for the use of blockchain and DTL for Financial Market Infrastructures. In addition, the WFE previously submitted a response to a paper by the European Securities and Markets Authority and another response to the Europe Commission’s Discussion Paper, on the topics of DLT and FinTech.