Nasdaq has recently announced a partnership entailing the integration of the Microsoft Azure Blockchain. While Nasdaq has a strong history of leading the capital markets industry, the news suggests a growing demand for the many benefits offered by blockchain technology throughout the broader Fintech industry.
The History of Nasdaq and Blockchain Technology
Nasdaq has been a world-wide leader in the financial industry since creating the world’s first electronic stock market in 1971. Since then, they’ve been the center of numerous developments in the capital markets industry.
In 2015, Nasdaq announced plans to launch an enterprise-wide blockchain initiative, starting with the use of the Open Assets Protocol. As the press release read,
“The creation of a securities distributed ledger function using blockchain technology will provide extensive integrity, audit ability, governance and transfer of ownership capabilities.”
Bob Griefeld, Nasdaq’s CEO at the time, went on to discuss Nasdaq’s growing interest surrounding the integration of blockchain technology and securities:
“Utilizing the blockchain is a natural digital evolution for managing physical securities. Once you cut the apron strings of need for the physical, the opportunities we can envision blockchain providing stand to benefit not only our clients, but the broader global capital markets.”
In 2016, we saw the launch of the Nasdaq Financial Framework (NFF) which allowed for the assimilation of blockchain technology across a wide array of business applications.
Now, due to the financial industry’s rising demand, Nasdaq has partnered with Microsoft to provision the next evolution of capital markets.
How the New Partnership Echoes the Demand for Blockchain Technology
The Nasdaq Financial Framework will now encompass the Microsoft Azure ledger-agnostic blockchain. The purpose, says Nasdaq, revolves around a multi-ledger strategy to offer its clients a flexible solution— one that isn’t strictly tied to one specific blockchain.
As explained by Magnus Haglind— Senior Vice President and Head of Product Management for Nasdaq’s market technology business— modern technology is significantly impacting the current financial system:
“Our [capital markets] industry is evolving faster than ever with the advent and advancement of cloud, blockchain, machine intelligence and others. Key players in the industry are looking to these technologies to explore how they can become more effective and efficient, but also gain competitive advantage.”
Under the new partnership, Azure will offer a blockchain microservices suite for the execution of transactions and contracts through the NFF core infrastructure.
The Fintech Industry and the Impending Surge of Security Tokens
Nasdaq claims to see ‘immediate opportunity’ when it comes to managing the delivery, payment, and settlement of transactions which incorporate different blockchains with entirely different payment mechanisms. This is precisely what the new partnership aims to solve, according to Nasdaq Senior Vice President of Enterprise Architecture Tom Fray.
“With multiple blockchains in use by various industry participants, we believe that the combination of NFF and Microsoft’s blockchain technology can remove some of the project complexities that exist in this realm. Additionally, as more industries move towards capital markets technology and structures, we see the potential for blockchain to provide value in secure, frictionless and instantaneous matching of buyers and sellers.”
Such comments reflect the similar potential of tokenized securities in the capital markets industry. The benefits of added liquidity, increased investor access through fractional ownership, and greater overall efficiency offered by tokenization are already making a big splash in the Fintech realm.
Many experts claim that traditional finance is simply outdated— the benefits offered by blockchain technology entail an inevitable impact on the capital markets industry. And such seems to be the case already. Luxury property, real estate funds, even space are all currently undergoing tokenization— something that even professional sports teams have expressed interest in.
With institutional giants such as Fidelity, JPMorgan, and Goldman Sachs entering the space, the newly announced partnership between Nasdaq and Microsoft should come with no surprise.
What do you think of the partnership between Nasdaq and Microsoft? How will this further impact the capital markets industry? We’d love to know what you think in the comments below.
Image courtesy of Microsoft.