Factors influencing blockchain adoption in the South African clearing and settlement industry

Abstract

New technologies create opportunities to enhance and revolutionise current processes (Greco 2019). In 1997, STRATE was introduced; this system allowed for the replacement of paper Background: The adoption of and improvements in new technology in the South African capital market historically led to increased trade capacity and liquidity, which may be linked to the growth in market size.Aim: In this study the aim is to investigate factors that will influence the adoption of blockchain technology in the South African clearing and settlement industry.Methods: In this study semi-structured interviews to collect data among stakeholders in the clearing and settlement cycle/process of securities in the South African capital market are employed. Participants were identified through a combination of purposive, snowball sampling and targeted sampling using social media. Data were analysed using thematic data analysis with the aid of Atlas.ti software. Setting:The South African capital market, with specific focus on the clearing and settlement of equity.Results: This study identifies People, Organisation, Technology, Industry and Country (POTIC) as factors important in influencing blockchain technology adoption in South Africa. The study expands and contributes to traditional frameworks for adopting blockchain technology in the South African clearing and settlement industry by adding five factors: trust, load shedding, unemployment/layoffs, current infrastructure, useful life and educational campaigns. Conclusion:The POTIC framework will be beneficial to the Johannesburg Stock Exchange (JSE) and Shares Transactions Totally Electronic (STRATE) when considering the adoption of blockchain technology for the integration of trade, execution and post-trade services to reduce the settlement cycle. In addition, when regulators need to formulate new regulations they will benefit from considering the POTIC framework.

The role of blockchain technology in advancing sustainable energy with security settlement: enhancing security and efficiency in China’s security market

“…Any mature securities market must have a securities settlement system with a sound legal system, complete functions, safe operation, and advanced technology. In such a securities registration and settlement system involving numerous investors, it is crucial to enhance its security and efficiency (Baiod et al, 2021;Etemadi et al, 2021;Levis et al, 2021;Dowelani et al, 2022). Only by ensuring their trust can they actively participate in trading.…”

“…Third, blockchain technology can significantly reduce costs associated with securities settlement by eliminating intermediaries and minimizing manual processes. This eliminates the need for maintaining separate records and performing reconciliations, resulting in cost savings for market participants (Baiod et al, 2021;Etemadi et al, 2021;Levis et al, 2021;Trivedi et al, 2021;Dowelani et al, 2022;Mushaddik et al, 2023). Additionally, blockchain can increase accessibility by enabling fractional ownership and facilitating the trading of securities in smaller denominations, opening up investment opportunities for smaller investors and institutions.…”

“…In the absence of a CCP, settlement and delivery are relatively simple, that is, the settlement of goods and currency between the buyer and seller can be decomposed into two legal acts: one is to form an agreement and the other is to fulfill the agreement. The offer, offset, and debt modification between unspecified individuals are the fundamental legal principles of a CCP, and the combination of these three ensures the continuity, efficiency, and convenience of securities trading (Baiod et al, 2021;Etemadi et al, 2021;Levis et al, 2021;Dowelani et al, 2022;Mushaddik et al, 2023).…”

Mitigating bureaucratic inefficiencies through blockchain technology in Africa

“…The additional benefit of adopting blockchain technology is referred to as the relative advantage, and it is measured in comparison to the required expenses of converting to blockchain technology. Dowelani et al (2022) identified "people, organizations, technology, and industry" as significant elements that are likely to significantly impact the implementation of blockchain technology in South Africa. They were able to accomplish this by conducting data collection among "stakeholders in the clearing and settlement cycle/process of securities" in the South African capital market using interviews that were only partially structured.…”

“…They identified which aspects of the blockchain technology adoption landscape in South Africa are most significant. Conventional frameworks for blockchain technology adoption in the South African settlement and clearing industry were expanded and contributed to by Dowelani et al (2022), who added five new factors to the mix, including "trust, load shedding, unemployment/layoffs, current infrastructure, useful life, and educational campaigns." When analyzing the literature and findings of various scholars, the factors influencing the adoption of blockchain technology can be summarized as shown in Figure 4.…”