ABSTRACT
Post-trade processing is a critical area to understand blockchain’s application in mainstream finance. Blockchain is expected to significantly change securities custody, trading, clearing, and settlement systems, revolutionizing the securities market. The world’s major stock exchanges are actively exploring blockchain applications. In particular, the introduction of blockchain into the indirect holding mode of securities shortens the custody chain, reduces reliance on intermediaries, reduces the workload of back-office reconciliation, simplifies the settlement process, and improves settlement efficiency. Analysis and research on post-trade processing in the account-based model have been carried out for a long period of time, and a series of risk mitigation and management mechanisms have been established. However, the legal basis of tokenized securities is still to be explored. China’s experiment on the digital commercial paper exchange shows that blockchain’s potential in post-trade processing can only be unlocked when funds and securities are both tokenized. Hence, to apply blockchain in post-trade processing, CBDC is an unavoidable topic.
