Ex-President of TD Ameritrade and Coinbase: the Market Needs a Decentralized Stock Exchange

Asiff Hirji says that will level the playing field between retail investors and institutions. Robinhood CEO Vlad Tenev also called for “Real-Time Settlement.”

The recent chaos with Robinhood has the market participants realizing that it is time to go decentralized. Asiff Hirji, former President of TD Ameritrade and Coinbase, says we need a “decentralized stock exchange.”

That is because “the playing field will never be level for retail investors without one,” said Hirji, in his LinkedIn write-up.

Hirji, a former partner a16z & TPG, points to the “archaic two-day trade settlement process” as the evil of the issues which pushed the online broker, Robinhood, to the brink of closure in the event of massive volumes, price volatility, and poor regulation.

About this, even Robinhood feels the same as co-founder and CEO Vlad Tenev wrote, “It’s Time for Real-Time Settlement.” The system that was introduced in the early 1970s is still in place today — “the most obvious of the flaws in our current system.”

The poor market structure and regulation allow exchanges to have a monopoly on market data, large institutions to trade exclusively with each other in dark pool venues, and mandate a trade process that only increases cost and complexity, said Hirji. As such, he said, it is past the time that “equities trading enters the 21st century” of instant settlement that will not only drastically reduce costs and free up literally billions of dollars of capital but would also “level the playing field between retail investors and institutions.”

Here, he points to blockchain and notes that billions of dollars of transactions are happening on DEXs (decentralized exchanges).

Despite the many attempts to move stock trading to the blockchain, Hirji says it’s not coming to fruition because stock exchanges “do not want a decentralized, public marketplace as then they have no role to play.”

While settlement and clearing brokers would lose their revenue streams, hedge funds trading in dark pools don’t want to lose their edge. Regulators should be the ones ushering it in, he wrote.

They must start by “pushing to make securities native assets on blockchain” and then also “fix the Accredited Investor and Qualified Purchaser rule which serve only to keep some of the best performing investment opportunities out of reach of ordinary investors,” said Hirji.

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