One of the reasons for Overstock January stock activity
Analysts have long said blockchain has the ability to make trading in stocks and other securities quicker, cheaper and more transparent, and 2018 will offer more of a look into whether investors actually want to trade on a distributed-ledger platform.
Online retailer Overstock ( OSTK), which is rapidly morphing into a blockchain company, has opened up a blockchain-based trading system it majority-owns, tZero, to more investors.
TZero, along with Siebert Financial ( SIEB) and Overstock, have said they intended to partner to "offer deeply discounted online trading" in the first quarter of 2018 — charging $2.99 per trade and, eventually, $1.99 for members of a new, "elite" segment of its Club O rewards program. The company also hopes to make it a bigger alternative trading system for tokens and initial coin offerings.
And the tZero platform can settle trades on the same day, potentially offering brokers a way to shorten the time between when an investor's order is executed and when money and securities are actually exchanged. While investors will still be able to make trades in milliseconds, brokers could lower their risk of seeing a trading counterparty defaulting. Today, the SEC requires that trades must be settled within two days.
For now, the platform is largely being used as an outlet for short-selling. In particular, Overstock CEO Patrick Byrne hopes the platform's blockchain technology will address what he has long considered abusive short-selling practices by prime brokerages — particularly surrounding rules for locating shares that short-sellers borrow to make trades. Byrne, a vocal Bitcoin and blockchain evangelist, said in November that he intended to use tZero to go after a huge chunk of Goldman Sachs' ( GS) revenue.
"Arguably," D.A. Davidson analyst Tom Forte said, "they're disrupting or working to disrupt three things — one being short-selling, two being settlement, three being issuance, if you think about what they're doing with their initial coin offering."
In November, Byrne said the platform had $80 billion to $120 billion worth of lendable securities.
Meanwhile, Nuco is working with the TMX Group, the parent of the Toronto Stock Exchange, to build a blockchain platform for the NGX natural gas exchange, which is owned by TMX, said Nuco's Spoke.
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