When a client buys a share, the order is executed in less than a second. Owning the share takes much longer: one business day in the United States and two in Europe. That gap exists because the trade has to pass through several institutions, each with its own record, before the security and the cash change hands.
This article explains how that process works today, what changes when the asset and the money are on a blockchain, and what conditions are needed for the change to reach scale. It starts from one assumption: that the asset has enough liquidity on the network, which today is true for only part of the market.
How a share purchase settles today
Behind a buy order there are at least five types of institution:
- The client’s broker or bank receives the order and sends it to the market.
- The exchange matches it with a sell order and sets the price.
- The central counterparty stands between buyer and seller and guarantees that the trade completes even if one side fails.
- The central securities depository records the change of ownership and moves the security and the cash between participating institutions.
- The custodian holds the share on behalf of the end client.
Each keeps its own record of the trade, and those records are reconciled with each other every day. Settlement, the moment the security and the cash are exchanged for good, is not immediate. In the United States it has happened one business day after the trade since May 2024, what the market calls T+1. The European Union settles in T+2 today and moves to T+1 on 11 October 2027.
During that gap, buyer and seller remain exposed to each other. To cover that risk, institutions post collateral with the central counterparty, and that capital stays tied up while trades remain unsettled. And every mismatch between records can turn into a failed trade that has to be investigated and corrected.
What changes when the asset and the money are on a blockchain
If the share is issued or represented on a blockchain, and payment is made with money that is also on the network, the process changes at several points.
Delivery versus payment in the same transaction. The security and the money are exchanged in a single transaction. Either both move or neither does. The risk that one side delivers and the other does not, which today justifies much of the chain, disappears at the source.
One shared record. Every participant reads the same record instead of keeping its own. There is nothing to reconcile at the end of the day, and far less room for mismatches and failed trades.
A market that never closes. Settlement does not depend on the hours of payment systems. An asset can be sold on a Sunday and the proceeds used straight away, for another investment or as collateral.
Less capital tied up. With immediate settlement there are far fewer pending trades to post collateral against. Capital that today sits in the system waiting for settlement can work elsewhere.
Rules inside the asset. Paying dividends or coupons, voting or transfer restrictions can be programmed into the token itself, instead of being handled by hand along the chain of custodians.
Fractions without another product. A share or a bond can be split into small fractions without an intermediate fund or derivative, which brings within reach of more investors assets that are out of reach today.
What does not change is what the client sees: a screen to buy and sell and a position in the portfolio. What changes is everything that happens behind it.
What is needed for it to work at scale
None of these advantages is automatic. They depend on several conditions that are being built in parallel:
- Legal finality of settlement on the network. A transfer on the blockchain has to carry the same legal weight as the entry at the central securities depository. In the European Union, the DLT Pilot Regime (Regulation (EU) 2022/858) already allows authorised infrastructures to trade and settle securities on blockchain.
- Regulated money on the network. Delivery versus payment needs a means of payment on the same network: stablecoins issued under MiCA, bank deposit tokens or central bank money. Since September 2026 the European Central Bank has been settling tokenised transactions in central bank money through Pontes.
- Key custody to banking standards. Whoever controls the key controls the asset. Keys have to be generated and used inside hardware security modules (HSMs), under the same controls as the rest of the bank’s custody.
- Regulated trading venues and liquidity. Authorised markets operating on these networks are needed, with enough volume on them. In the United States, the SEC approved in March 2026 trading of tokenised Russell 1000 stocks and index ETFs on Nasdaq.
While liquidity is split between the traditional market and the network, both systems will coexist, and institutions will have to operate in both at the same time.
What it means for a bank
For a bank, settlement on a blockchain does not remove its responsibilities. It is still the one that knows the client, assesses suitability, holds custody of the assets, reports to the supervisor and calculates tax. What changes is where post-trade happens and with what tools: the network’s record becomes one more source to integrate with core banking and accounting, and custody comes to depend on key management.
So the practical question is not whether settlement on blockchain will arrive, but how to prepare to operate in both systems while liquidity moves. The integration aspects are covered in how blockchain integrates with core banking and accounting, and the different ways to represent a share in tokenised stocks: three different instruments under the same name.