Securities settlement  is a rather cumbersome process coming from the old days when securities were still materialised. The whole process is still needing some days to complete (between 1 to 3) generating some credit risks in the meanwhile.

Streamlining this process is therefore not only important from an efficiency view point but also from a credit risk perspective. If delivery versus payment is processed immediately,  it will optimise the processing costs and reduce the credit risks.

This is why Goldman Sachs put some efforts and investments in that mater which lead to issuing a patent which has been recently validated.

The idea here is to create a new currency called SETLcoin which will represent any kind of securities (called PIC in the patent). These new coins will be exchanged against other coins like bitcoin.

The patent is describing a coordinator which will ensure the simultaneous completion of the two transaction legs (money against securities).

This reinforces the view BNP Securities has shared in a research paper earlier this year, the securities industry is going to be severely impacted by the blockchain technology. In this paper, BNP presents two possible scenarios : a complete disruption where the market participants trade directly without any central body or a more conservative one where the established actors will embrace blockchain technology.

This patent has been filled something like one year ago and demonstrates how much interest the established actors have for this technology.

Goldman recently confirmed its forecast regarding the disruption blockchain will introduce, this post also shows the amazing investments the blockchain technologies have attracted.