I am looking into XEM tecnology, but I don't understand some points.
The first:
-- Equity Markets
The equity market poses a very inefficient system when it comes to post-trade clearing, payment and settlement. Trade matching occurs at the rate of hundreds of transactions per second but clearing and settlement of stock takes more than two days to complete. The equity market should consider a complete system revamp as the current systems and practice methods are based on legacy process practices that are outdated. The NEM blockchain technology is a suitable core component to re-design the equity market ecosystem which could save the industry billions of dollars a year in operational expenses.
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What does it mean ''clear and settlement of stocks''? Sorry I am not english native language.
Is this use-case really useful for financial world? Are there competitors outside the blockchain who can do this function better?
Thanks for everyone can explaine.
The first:
-- Equity Markets
The equity market poses a very inefficient system when it comes to post-trade clearing, payment and settlement. Trade matching occurs at the rate of hundreds of transactions per second but clearing and settlement of stock takes more than two days to complete. The equity market should consider a complete system revamp as the current systems and practice methods are based on legacy process practices that are outdated. The NEM blockchain technology is a suitable core component to re-design the equity market ecosystem which could save the industry billions of dollars a year in operational expenses.
------------
What does it mean ''clear and settlement of stocks''? Sorry I am not english native language.
Is this use-case really useful for financial world? Are there competitors outside the blockchain who can do this function better?
Thanks for everyone can explaine.
Whenever you buy stocks you pay cash, however there is a 3 day settlement period between the transaction and the settlement (receiving stocks). The problem about this is that during those days there is a risk of not completing the transaction (when you don't have the funds to finance it). So what XEM is doing is to reduce that period and instantly settle a purchase/sale.