Digital ledger set to transform stocks
Staff Reporter :
As rapid technological advances reshape the global economy, stock markets across the world are undergoing profound transformation.
Yet Bangladesh’s capital market continues to wrestle with long-standing challenges – market manipulation, lack of transparency, slow settlement processes, and persistent erosion of investor confidence.
Experts suggest that blockchain technology could provide a breakthrough solution, restoring credibility, efficiency, and trust in the country’s financial system.
Blockchain, a decentralised digital ledger, records each transaction in a block that is cryptographically linked to the previous one. Once recorded, the data is virtually impossible to alter, creating a permanent and verifiable chain of transactions.
For stock exchanges, this means a tamper-proof record of every share purchase and sale, dramatically reducing opportunities for manipulation or distortion.
This unique feature makes blockchain particularly well-suited to financial markets where transparency and trust are paramount.
Several markets around the world have already adopted blockchain with notable success. In 2023, the Australian Securities Exchange (ASX) integrated the technology into its CHESS settlement system, reducing settlement times from two to three days to near-instant, significantly improving liquidity.
Switzerland’s SIX Digital Exchange, built entirely on blockchain, has enhanced investor confidence through transparent and secure operations.
The trend is also visible in emerging economies. India has piloted blockchain-based trade reporting across select exchanges to better detect irregularities. The Philippine Stock Exchange has applied blockchain to strengthen transparency in share issuance and record-keeping, while Vietnam has used it in digital bond transactions to shorten settlement times and reduce administrative costs.
For Bangladesh, the introduction of blockchain could usher in a new era of transparency. Every trade would be publicly verifiable and immutable, sharply limiting opportunities for fraud.
Settlement cycles could be reduced from the current T+2 or T+3 framework to a matter of seconds, boosting liquidity and allowing investors’ capital to circulate more efficiently. Investors would also gain the ability to directly verify their own transaction history, reducing reliance on intermediaries.
Despite its promise, adoption will not be without obstacles. Blockchain requires powerful servers, advanced cybersecurity frameworks, and skilled professionals – investments that will be substantial. Legal reforms will also be essential, including amendments to the Securities Act, Depository Act, and Exchange Regulations.
Resistance may also come from groups that benefit from the existing lack of transparency. Comprehensive training and adaptation across the entire ecosystem – from brokers and depositories to regulators and investors – will be critical. Without such preparation, entrenched practices could undermine the benefits of the new technology.
Blockchain is no longer a futuristic concept; it is already reshaping financial markets across both developed and developing economies. For Bangladesh, adoption could deliver much more than faster settlements – it could restore investor confidence, attract foreign capital, and modernise the capital market for sustainable growth.
The challenge lies in striking the right balance: mobilising investment, enacting regulatory reforms, and ensuring stakeholder readiness, while urgently rebuilding a stock market capable of earning the trust of both domestic and international investors.