Financial services, Technology

Abu Dhabi Securities Exchange explores the crypto-asset phenomenon

Abu Dhabi Securities Exchange (ADX) has released a thought paper on infrastructure for crypto and distributed ledger environment, and financial market infrastructures (FMIs).

Rashed Al Blooshi, ADX
Rashed Al Blooshi, ADX

The thought paper has been issued in cooperation with the Central Securities Depositories (CSD) and under the patronage of the International Securities Service Association (ISSA).

CSDs is the entity responsible for investigating the crypto-asset phenomenon and see where they might be able to help the market develop a safe and efficient environment for issuers and investors. ADX aims to identify the technical and operational criteria required to issue crypto-assets, as well as provide a reliable reference to support financial institutions in managing the transition of the issuance of traditional and crypto-assets.

Rashed Al Blooshi, Chief Executive of ADX, noted the importance the market plays as a member of ISSA CSD Working Group, which works on further developing the implementation of Distributed Ledger Technology (DLT) based on blockchain, as well as its contribution in the development of the crypto-asset infrastructure study. “ADX continues its efforts to manage the transition from conventional assets to more encrypted assets, which are witnessing major and rapid development in the region,” he said.

Al Blooshi pointed to the importance of upgrading financial market infrastructure (FMIs) and incorporating standards of governance within their systems to prevent market fragmentation, increase investor confidence and raise the quality of its infrastructure.

FMIs play a pivotal role in supporting crypto markets, offering investor protection, preventing market fragmentation, as well as making it possible for financial institutions to provide advanced services in the field of crypto-assets, according to Al Blooshi. “At ADX, we embrace new and innovative technology and are always looking to capitalise on advancements in FinTech; particularly in crypto-assets to optimise the benefits we offer to our investors and stakeholders. Our approach is in line with Abu Dhabi government’s plans to strengthen digital transformation in the emirate and represents one of our goals to develop a financial market that is safe, transparent, efficient, and is in adherence with international best practices.”

It is noteworthy that ADX was the first stock market in the MENA region to adopt blockchain in its e-voting for listed companies’ AGMs. Furthermore, in early 2018, ADX signed a Memorandum of Understanding (MoU) with the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and seven leading global Central Securities Depository (CSD) companies, to collaborate on blockchain implementation in trading and capital market transactions. Additionally, ADX signed a partnership deal with Equichain to join its working community, which develops implementations of digital blockchain transactions to bring further efficiencies to capital markets.

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