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

Abstract

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.

Keywords

• blockchain
• clearing and settlement
• south africa
• strate
• csd
• equities
• capital markets
• jse