Wednesday 1 February 2017

Block Chain Chapter at Malta Stock Exchange

The Malta Stock Exchange (MSE) has set up a Blockchain ThinkTank consisting of members of the Exchange’s Board, its Chairman and Chief Executive and outside experts. The latter will assist in the formulation of a strategy geared towards addressing blockchain as an emerging technology. Chairing the committee will be Dr. Abdalla Kablan, an MSE Director, entrepreneur and academic specializing in machine intelligence, big data, analytics and computational finance.

MSE's Chairman Mr. Joseph Portelli said “Malta and the MSE are quite fortunate to have at our disposal our country’s preeminent technologist and a globally recognized expert on blockchain technology. Dr. Kablan has a proven track record within the technology space, evidenced by his latest start-up Hippo Data, the first Maltese company to ever be selected into the London Microsoft Accelerator Program.” This program is an initiative that helps entrepreneurs grow their companies.

Malta Stock Exchange
Originally starting off as the platform on which the ‘much-debated’ currency of bitcoin was based, put simply, blockchain is merely a distributed ledger. It encompasses a method in which information is recorded and shared by an accepting community. Each member in the so called ‘chain’ maintains his or her own copy of the information and all members must validate any updates collectively. Each update is a new “block” added to the end of the “chain.” In other words, it can be summed up as a potentially very secure ledger of digital events, shared between all parties that choose to participate in the events. Parties’ identities and data are protected by cryptography and recordal of new ‘blocks’ or changes in events can only be updated after there is at least 51% or more participant consensus. With such entry of such information, erasing thereof is not possible, hence disintermediating the concept and doing away with a central, monitoring and certification authority.

The platform / protocol manages the manner in which new edits or entries are initiated, validated, recorded, and distributed. Blockchain is the ‘tech-charged’ equivalent of the public ledgers of the past, with the added value of permanence, transparency, searchability and the elimination of third party intermediaries. The inception of blockchain saw the replacement of the intermediary (the keepers of trust) with complex algorithms and technological verification methods. Blockchain can be used in all types of transactions, including those related to contracts, assets, liabilities, identities, or practically anything else that is usually publicly available but can be described in digital form. Entries are permanent, transparent, and searchable, which makes it possible for community members to view transaction histories in their entirety.

In the world of capital markets blockchain is now being used by the Scottish stock exchange and the Australian Stock Exchange. Reasons for its popularity include advantages of speed (allowing investors and brokers to receive their money only 15 minutes after a trade is executed) and reduced costs (blockchain could save the financial industry over 41 billion annually in back office costs).

The Malta Stock Exchange's creation of a specialised committee to assess this is definitely a positive move in the right direction and tallies perfectly with the Exchange's recent 23 point Strategic Plan that will focus on internationalisation and modernisation of the Exchange.

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