How Blockchain Technology Could Improve ECN Forex Brokerage Platforms

The distributed ledger technology popularly known as the blockchain has been one of the most disruptive forces of technological advancements in the last decade. Since the emergence of bitcoin and subsequently the other cryptocurrencies in the early 2010s, a lot has happened in the global financial markets.

And while cryptocurrencies have taken most of the plaudits, the real force of change according to experts has been the blockchain technology. Even as cryptocurrencies continue to face various challenges, blockchain technology continues to be embraced in financial institutions while governments are also showing interest.

In fact, some of the biggest banks in the market are already leveraging blockchain technology to launch their own digital currencies. Last month, news emerged that JPMorgan Chase (JPM) one of America’s largest financial institutions was developing digital coins using blockchain for payments. So, the pathway is already being created by top financial institutions.

From the perspective of trading, the derivatives market have already made inroads into blockchain technology with several companies already running pilot projects with a view of launching market-wide systems.

However, such progress is yet to be witnessed in the forex market, especially within the framework of liquidity providers. While dealing-desk (market makers) trade against their clients to provide liquidity, the main liquidity providers in the forex market are financial institutions. Electronic Communications Networks or ECN forex brokers use a pool of networked financial institutions to provide liquidity to their clients. They do this by giving their clients access to this pool, which offers real market rates and fast execution of orders.

So, how useful could blockchain technology become in ECN forex brokerage? First, we need to look at the impact blockchain technology could have on financial institutions (the liquidity providers for ECN forex brokers).

In order to illustrate how important blockchain could be to the providers of liquidity to ECN forex brokers, we need to point out why these financial institutions are so crucial to the global foreign exchange market.

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Disclaimer: The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor ...

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