Global decentralized stock exchange: an innovative permissioned-blockchain framework for integrated capital markets
Abdullah M. Al-Awadhi, Humoud Alsabah, Saad Alnahedh, Omar AliPurpose
This paper aims to propose a regulatory-aware conceptual and theoretical framework for a global decentralized stock exchange built on a permissioned blockchain infrastructure. It examines how integrating trading, clearing, custody and supervisory functions within a unified distributed ledger can enhance efficiency, liquidity and compliance across jurisdictions.
Design/methodology/approach
The study develops a dual technical–regulatory framework supported by a reduced-form theoretical model grounded in market microstructure and governance theory. It evaluates consensus mechanisms, interoperability, privacy and scalability alongside consortium governance, cross-border oversight, legal recognition of tokenized securities and automated compliance, informed by comparisons with legacy exchanges and selected industry pilots.
Findings
Permissioned blockchain exchanges with atomic settlement and embedded compliance can reduce transaction costs, settlement risk and information asymmetries while improving liquidity, transparency and participation. The model predicts narrower spreads, higher trading volume and greater stability relative to conventional T+2 infrastructures.
Practical implications
The framework offers regulators, exchanges and financial institutions a phased implementation roadmap, governance templates and compliance-by-design mechanisms that enable gradual migration from legacy systems without sacrificing accountability or investor protection.
Originality/value
The paper introduces a hybrid governance model that embeds regulatory enforcement directly into exchange architecture and links design parameters to testable economic outcomes, advancing research at the intersection of financial regulation, fintech infrastructure and market microstructure.