A new era of private securities: Application of Blockchain in private capital markets infrastructure

Abstract

This paper explores the use of emerging distributed ledger technology in capital markets infrastructure with the aim of improving the efficiency of private securities issuance, settlement and trading. It emphasises the current inefficiencies in the private securities market and highlights the implications of the tokenisation process of private securities and the advantages of DLT-native digital and tokenised securities over securities issued in the traditional form. The paper also highlights the aspects of issuance of securities on permissioned or semi-public Blockchain versus public Blockchains and the use of Blockchain protocol level smart contracts versus token-based smart contracts for adoption by capital markets. It stresses the legal grounds for security tokens and the position of regulators towards a new form of securities issuance.