Blockchain technology in stock market – How it will transform trading

­Trading is the process of selling and buying companies stocks. The speculative nature of currencies, commodity indices and company shares creates money-making opportunities for the investors. Money-Making opportunities see a significant rise when the process of selling and buying stocks is made faster. The DIY platforms have been brought to the relief of investors. Still, the scope of technology improvement is quite big in the trading sector. The world is talking about BlockChain technology and its use in every possible field. Trading is also expected to transform with this technology around. Let’s find out how.

Combat scams made easy

World of a stock market is full of stories where companies drew a rosy picture by posting false profits and created scams causing losses to the investors. There are instances of manipulation of figures of trade books and other malpractices which ultimately hit the investors badly. The concept of blockchain states that each and every transaction is time-stamped and cannot be altered in any way. Thus, blockchain is surely going to be a big tool for addressing the elephant of a regulation building in the room. The investors are surely going to have a great source of relief with such systems in place.

Faster transactions

Investors cringe when they have to wait for the proceeds of the transactions made in trading. Though the previous system of T+5 has been brought to T+2, the possibility of improvement cannot be ignored. Blockchain system facilitates the idea of smart contracting. This contracting system can shorten the settlement period considerably and can offer more liquid funds to the investors. The end result will be the availability of more funds for investing and faster booking of profits, boosting the investor sentiment eventually. Australian Stock Exchange has already taken steps in this direction and has applied a distributed ledger system in its current system of trades’ settlement.

In-built regulatory system

The instances of fraudsters getting away with their actions are serious deterrents to stock market investors. The scams surface up very late making the process of recovery almost impossible. False product announcements for misleading investors, insider trading and etc. are some of the practices that need some corrections in the current system. The blockchain is being looked upon as a correct measure for bringing compliance to the security transactions. The system will be able to flag the transactions of suspicious nature and will pass on timely alerts. How? The Blockchain has the ability to put an algorithm in place which can detect anomalies and suspicious trading patterns making trading a safer place to be.

Seamless dividend distribution

Dividend distribution is a big process and requires a lot of caution. It definitely attracts processing cost, too, due to its giant nature. Cash register of investors ringing in with the returns is a marvellous thing that can happen to them as well as companies they invest in. With the automation brought in the process of releasing dividends, a dual advantage of faster parking of funds and dispute-free payments can be achieved. Blockchain, with the help of its automated tools, facilitates seamless dividends payment taking a huge burden off the companies.

Security token offering – a road yet to be explored

The idea of security tokens is catching up with the companies. The process of issuing blockchain tokens in place of securities is looked upon as an easier, faster and safer way of calling for investments in the company. These tokens are not the actual money but a promise of paying back returns in future. Bitcoin futures investing is largely based on the concept of STOs and is sure to change the way finances exchange hands between the company and investors.

Reducing intermediaries

Trading of stock requires money to move through lots of hands while travelling from buyer to seller. The intermediaries can be avoided with the introduction of automated platforms enabled by BlockChain. It, like faster dividend payment, will speed up the transaction settling too. The investors are likely to have better margins as all these intermediaries taking their cuts will be removed from the system.

In essence, the Blockchain is going to be the future of trading. The investors and companies will definitely be benefited by the quickness, transparency and compliance which are ideal for safer and profitable trading. Log on to Technewshere to find more updates on BlockChain.

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