The Athens Stock Exchange (ATHEX) intends to incorporate blockchain technology into its Electronic Book Building (EBB) system, positioning it to become a financial industry pioneer.

In an effort to improve user security, efficiency, and transparency, ATHEX and the Sui blockchain ecosystem announced in early March that assets will be digitally certified.

Separate confirmations are typically required for the allocation and settlement of securities in the primary issuance procedure. But combining blockchain makes this easier by combining them into a single, efficient confirmation.

This has the potential to result in quicker and more effective transactions for all parties concerned, including issuers seeking funding, investors, members of the exchange, and most crucially, them.

Cointelegraph spoke with a representative from Sui to better understand its collaboration with ATHEX and its blockchain being used to level up operations in a traditional finance (TradFi) setting.

A major security improvement is one of the main reasons to integrate blockchain into a highly sensitive network, such as a stock market that handles billions of dollars on a regular basis.

In addition to being on a public, unchangeable record and offering an additional layer of protection, digital certificates, which are intrinsic to blockchain transactions, can help reduce the possibility of manipulation, a recurring problem in TradFi.

This openness extends to regulatory monitoring, making it simple for authorities to keep an eye out for questionable activity in trade activities. A spokesman for Sui said:

"Primary issuance centralised processes have been the victim of opaque allocation practices and bad actors in the industry for decades."

Also having an immutable, public ledger reflecting trades would simplify regulators’ ability to monitor trading activities for suspicious transactions or improper allocations,” they said

They stated that this specific use case is appropriate for raising capital and improving price formation, transparent allocation, and capital raising efficiency overall by lowering the risk of primary issuance.

Building electronic books on-chain

With the goal of becoming a future fundraising instrument, EBB will enable both mature and early-stage businesses to sell transferable securities.

The Sui spokesperson claims that the Greek stock market is at "the forefront of innovation [...] in comparison to exchanges around the world" because of its EBB.

"ATHEX has successfully relaunched their corporate bond market with a large retail demand and significant oversubscription," the statement read.

Increasing innovation while maintaining the safety, security, and transparency that people and regulators need is the aim of utilising blockchain technology.

They also cautioned that it is crucial to give the speed, security, and fees of the specific blockchain network first priority when integrating blockchain technology at scale in the traditional financial sector.

Sui stated that while other exchanges have attempted to incorporate blockchain technology into other aspects of their business plans, ATHEX is ahead of the competition when it comes to utilising Web3 tools because of its strong collaboration with Sui.

Web3 TradFi patterns

With its EBB tool, ATHEX may have been among the first stock exchanges to use blockchain technology, but other international stock exchanges have also been experimenting with Web3.

Notably, the London Stock Exchange (LSE) said on March 11 that it would review applications based on the standards specified in its Crypto ETN Admission

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cryptocurrency exchange-traded notes (ETNs) during the second quarter of 2024.

On March 25, it said that applications for the crypto ETNs could be submitted as soon as April 8, with successful funds to be listed the following month with approval from the country’s Financial Conduct Authority.

Although the exchange does not integrate with blockchain technology, its transparency and Web3-friendly design may indicate a broader trend in TradFi.