Blockchain Financial Plumbing Is Still Years Away, Says LSE Spinoff Exactpro

The new systems are still prototypes and need rigorous testing before safely connecting to live infrastructure.

A former unit of the London Stock Exchange, QA specialist Exactpro, estimates that DLT post-trade systems may still be two years away from such testing.

If blockchain is supposed to be the new plumbing for the world's financial markets, then think of Exactpro as the home inspector who checks the pipes for leaks.

A former subsidiary of the London Stock Exchange whose management bought it out in 2018, Exactpro employs some 560 specialists who test trading and clearing systems for traditional securities exchanges, investment banks, brokers and technology firms.

In Exactpro's estimation, distributed ledger technology systems are still a few years shy of tough benchmark software tests, which they would have to pass before anyone could use them to handle post-trade processes in the real world.

Digital Asset is busy replacing Australian Securities Exchange's CHESS system for cash equities, which had been pushed back until Q2 2021.

In particular, the most likely points of failure will be where these DLT systems connect to legacy architecture, according to Exactpro, which will present a white paper on its methodology for testing such "Hybrid financial software" at the ICST 2019 conference in China next month.

"Professional testers always expect that the system will not work," Itkin said.

When Exactpro designs a test strategy for a next-generation post-trade system, as it recently began doing at Hong Kong Exchanges and Clearing, it checks both the functional specifications and also non-characteristic conditions, such as when a huge load is placed on the system, or in the case of a server going down or some other type of service disruption.

"We are looking at the systems that are most likely to be used as the foundation of the future generation of settlement and clearing systems, and Corda, Hyperledger and DA look like the most probable candidates to serve as the foundation going forward."