FINRA Issues Report on Blockchain & Implications for Securities Industry

BlockchainFINRA has published a report (embedded below) on Blockchain or Distributed Ledger Technology (DLT) and its implications for the securities industry. The publication is entitled; “Distributed Ledger Technology: Implications of Blockchain for the Securities Industry.”

FINRA, or the Financial Industry Regulatory Authority, is the self-regulatory organization for the US securities industry providing both guidance and enforcement for individuals and firms.

FINRA notes that Blockchain has generated “significant interest in the securities industry”. Many established and early stage financial services firms are investigating utilizing the technology or have already integrated Blockchain into their operations. FINRA spoke to several member firms to better understand their current or potential future use of Blockchain. These broker-dealers highlighted their perspective on the potential benefits and challenges posed by Blockchain and noted that they are considering how different DLT applications would operate within the current regulatory framework.  One of the key opportunities of Blockchain is ability to reduce settlement times for all types of securities transactions

In response, FINRA issued a report that reviews the use and implications of Blockchain. The paper also seeks comments as part of an effort to obtain feedback on any challenges associated with the use and implementation of DLT.

“Over the past couple of years, FINRA has actively engaged with market participants to monitor developments related to DLT and its potential impact in the securities industry,” states the FINRA’s Office of Emerging Regulatory Issues. FINRA believes this early collaboration “will allow the industry to reap the benefits of the technology, while ensuring protection of investors and maintenance of market integrity.”

The document was described as part of an “ongoing dialogue” with market participants.  The paper provides an overview of DLT and highlights applications and the implementation and regulatory considerations for broker-dealers. Among the applications addressed are those being used or tested in the equity, debt and derivatives markets, as well as shared utilities.

Comments on the paper are being accepted until March 31, 2017. Interested parties may submit they comments by email to [email protected] or by mail to:

Marcia E. Asquith
Office of the Corporate Secretary FINRA
1735 K Street, NW Washington, DC 20006-1506

The Report is embedded below.


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