There are many ways in which the financial industry can benefit from the adoption of blockchain technology. Non-Zero is one company which is starting a massive effort from a niche sector in finance. By targeting retail trading brokers and their clients, the company aims to ensure radical transparency for both sides.
Please Note: This is a Press Release
For years the retail trading industry has faced a problem – the gains of the brokerage have typically been their clients’ losses. At the advent of the application of blockchain technology in finance, the industry can solve this problem once and for all.
The principal issue in the relationship between retail brokers and their clients over the years has been trust. Non-Zero is opening the doors to a new era in the dealings between clients and their financial intermediaries by leveraging some key aspects of blockchain technology.
While regulators have been pondering how to better protect retail investors, it is the industry itself which has to come up with the answer. Market making brokers have been booking the losses of their clients as revenue. The ecosystem developed by Non-Zero, enables these same brokers to give back warehoused gains to losing clients.
Non-Zero utilizes blockchain technology to power a real-time reallocation engine. The system is calculating the rewards per client and is creating a smart contract which transfers Non-Zero tokens (NZO) from the broker’s to the client’s wallet. The net revenues of the broker from booking gains on client losses (warehousing) are distributed back to the client on a pro-rata basis daily.
Instead of relying on their customers losing money, the brokers will mainly book gains from spreads and commissions. On their part, clients will be able to use the tokens distributed back to them as they see fit.
The greed and fear emotions which are driving trading decisions for retail traders are typically leaving them on the losing side. Non-Zero is not warranting better results for traders, but it is definitely providing a more transparent environment for the broker-client relationship.
As clients know where the revenues of a broker which is internalising flow are coming from, they are able to benefit from a transparent business relationship and solid execution of their orders.
With their redistributed losses in the form of tokens, the traders can commit more time to the market or purchase additional tools that help them better understand market dynamics
Non-Zero is a state-of-the-art example of how a traditional industry can get reshaped via using blockchain technology. The company’s product is coming to market at the right time: just after regulators in the EU have tightened the screws over the retail broking industry.
With the right amount of adopters, Non-Zero’s platform could reshape the financial intermediaries space. Early signs point towards vibrant interest on part of brokers and traders towards the product.
The retail over-the-counter market for foreign exchange and contracts for difference (CFDs) is only the beginning for Non-Zero. The company’s ecosystem is fully suitable to be adopted by many other financial intermediaries that are keen to adopt an innovative technology to fully align their interests with those of their clients.