Nigerian stock exchange plans to use blockchain for trade settlement. At present, young investors are more inclined toward the crypto market, and exchanges are not getting a lot of users. So, the largest stock exchange in Nigeria, Nigerian Exchange Ltd, plans to roll out a trading platform using blockchain. It is something stock exchanges of many countries are considering because the use of blockchain could allow for same-day settlement instead of (t+1) or (t+2) days settlement.
Nigeria’s stock exchange to employee blockchain technology
The Chief executive of the exchange, Temi Popoola, said that blockchain is the kind of tech a lot of young Nigerians want to adopt. So, they are looking at ways to use it and grow their market. Most young citizens of Nigeria are inclined to make crypto transactions on international platforms. So, the in-house companies do not see huge volumes.
One such platform is the Nigerian Bourse, a Bitcoin platform where users have traded $185 million in Bitcoin in Q1 2022. The Nigerian Exchnage Ltd will partner with Bourse and get regulatory approval before launching the blockchain-integrated platform in 2023. They believe blockchain use will become an effective way to trade financial assets and bring easy market access.
However, all of this is only possible if the authorities allow it. Unless the central bank gives regulatory approval to use blockchain, the exchange won’t be able to go ahead with the launch. And it will be difficult because Nigeria’s central bank has always been a major skeptic of cryptocurrencies. They even prohibited banks from dealing with crypto as they are supposedly a risk to the nation’s financial system.
What are the benefits of using blockchain to settle trades?
Blockchain can be used to automate and decentralize stock markets for a far more efficient experience. It will also help customers save a lot of commission money by speeding up the transaction settlement process. The use of blockchain can also eliminate the need for a 3rd part regulator to a major extent. This is because the rules can be integrated into smart contracts, which be applied automatically.
What are your thoughts as the Nigerian stock exchange plans to use blockchain? And do you think they will get regulatory approval from the Central bank? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.