Blockchain, the financial technology that promises to revolutionise how the world does business, has made another advance with the help of researchers from the University of Strathclyde.
In a “ground-breaking” experiment conducted in collaboration with the Toronto Stock Exchange (TMX), National Physical Laboratory, and consultancy firm Z/Yen, researchers from the Strathclyde Business School time-stamped financial stock trades using atomic clocks, and recorded the trades directly on a distributed ledger.
The ‘Atomic Ledger‘ project recorded over 20 million transactions, time stamping them all with Co-ordinated Universal Time (UTC). They were recorded over three hours of trading to the ChainZy distributed ledger system – a time stamping engine created by the team using Z/Yen’s technology.
Existing financial market ‘clock synchronisation and time stamp requirements’ mandate that both trading venues and market participants synchronise their clocks to UTC. However, different processing speeds, server capabilities and execution code can result in digitally programmed orders arriving at a market place at different times. New EU legislation coming into force on 3 January 2018 – The Markets in Financial Instruments Directive (MiFID II) – means firms who provide financial services must use more accurate time stamping traceable to UTC to promote improved transparency, and better deals for customers. Current regulatory guidance suggests that trades need to be recorded in microseconds (a millionth of a second).
The results of the experiment will be analysed by the University’s Centre for Financial Regulation and Innovation, providing insights into the need for precision time stamping in financial transactions. They believe that the results will be useful for regulatory and financial market participants, and will provide a benchmark to “incorporate the concept of timing into financial asset price discovery.”
Daniel Broby, Director at the Centre, said: “The role of distributed ledgers and precision timing is becoming ever more relevant as Fintech companies adopt blockchain for financial transactions. This is an exciting trial that will have real world policy impact.
“It is at the cutting edge of both finance and technology, helping make money payments over the internet cheaper, faster and more efficient.”
Join DIGIT for the 4th annual Financial Technology Conference in Edinburgh on the 27th and 28th of September 2017. Delegates from the financial services and FinTech sectors can register and attend free of charge.