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TORONTO (Reuters) - Canada's biggest stock exchange operator, TMX Group Ltd, said on Wednesday it plans to expand its use of blockchain technology, pitching a service for buyers and sellers of natural gas that should help speed up and simplify transactions.
Banks and commodity traders across the world are actively exploring potential uses for blockchain, the technology first developed for the crypto-currency bitcoin, in the hopes its distributed ledger approach can cut costs and reduce paperwork.
"The whole idea is to ensure there is natural price discovery, so that you as a buyer have access to all the transactions that are taking place instantaneously," said Brian Pow, an equity analyst at Acumen Capital Partners in Calgary. "What it should do is narrow the spread on pricing."
He said that natural gas transactions currently can take 24 to 48 hours to settle depending on how quickly buyers and sellers update their records with intermediaries.
TMX said it is in talks with customers of its Natural Gas Exchange it hopes will use the prototype to track the flow of gas supplies at delivery locations in the United States.
"As with all new technology projects, the deployment path is well defined, but there are many other factors that need to be considered in the business process, including client and customer adoption as well as legal and regulatory frameworks," John Lee, TMX's vice president for innovation and enterprise delivery, said in an emailed response.
TMX developed the service in partnership with Nuco Inc, which builds custom blockchain networks for businesses.
Lee said that pending proof of the benefits of the service, TMX would look to expand use of the technology at NGX but that it was still "early days".
The company, which also runs the Toronto Stock Exchange, the TSX Venture for junior issuers and the Montreal Exchange for derivatives, among other businesses, said in April it was testing a blockchain-based electronic shareholder voting system.
Nasdaq Inc, one of the world's largest providers of technology for exchanges and clearing houses, uses blockchain to power its U.S. market for shares of private companies and has been testing it to run proxy voting for companies listed on its exchange in Estonia.
Reporting by Alastair Sharp; Editing by Cynthia Osterman