From Legacy Systems to Blockchain: The Settlement Revolution Explained
As noted by Jeff Lillien, Securities settlement has long been at the heart of global financial markets, ensuring that when investors buy or sell securities, ownership is transferred smoothly and payments are received in a secure, timely manner. Traditionally, this has been managed through centralized clearinghouses and depositories, which act as trusted intermediaries. While these systems have provided stability, they are often slow, costly, and heavily dependent on reconciliation between multiple participants. Settlement cycles like T+2 (trade date plus two days) can delay liquidity and increase counterparty risk. Distributed Ledger Technology (DLT), particularly blockchain-based systems, is increasingly seen as a solution capable of addressing these inefficiencies while maintaining the reliability of financial markets demand. DLT enables a decentralized, tamper-resistant record of transactions that can be shared in real time across participants. This represents a dramatic shift from existing models where central authorities maintain and validate transaction records. As global markets grow