Chainlink Reveals Plans to Fix Corporate Action Errors Costing Firms Millions

Key Takeaways:

• Chainlink aims to use AI and blockchain to streamline the communication of corporate information.
• The network has also introduced technologies to ensure data privacy for financial transactions.
• LINK token is up by about 2.96% in 24 hours, signaling strong buying.

Chainlink (LINK), a leading decentralized blockchain oracle network built on Ethereum, has announced ambitious plans to address the widespread inefficiencies related to corporate actions.

In a recent report dated October 22, the project stated that it is collaborating with established financial entities like Euroclear and Swift, along with a group of six prominent institutions.

Chainlink seeks to harness the combined potential of artificial intelligence (AI) and blockchain technology to streamline the communication of essential corporate information.

The Corporate Action Cost Crisis

Corporate actions, including dividends, stock splits, and mergers, play a crucial role in the operation of the capital markets. These events influence companies' financial health and necessitate swift communication with stakeholders, such as investors and asset managers.

Corporate actions processing is one of the most complex unstructured data problems in finance.

We examine this challenge in-depth, showing how #Chainlink's new work with 8 major institutions unlocks a single source of truth around corporate actions data: https://t.co/myVC6yQtcv

— Chainlink (@chainlink) October 22, 2024

Nevertheless, the existing procedures surrounding these actions are complex and inaccurate. A recent study by The ValueExchange, with backing from the International Securities Services Association (ISSA), indicated that inefficiencies in corporate action processes cost market participants an astonishing average of $3-5 million annually.

This amount can grow into hundreds of millions for larger firms, primarily because 46% of corporate action data is processed manually.

Meanwhile, the consequences of these mistakes extend beyond financial losses; they can significantly affect capital markets. Over 45% of brokers have reported losses exceeding $1 million due to mishandling corporate actions, reaching tens of millions in some instances.

Moreover, the opportunity costs from traders not receiving timely data can be even more significant, underlining the need for corporate action management reform.

Related: AI Crypto Market Surges Above $32.5B, Led by FET, NEAR, and RENDER

In light of these urgent issues, Chainlink is collaborating with other industry leaders to help institutions address the lack of structured real-time data for corporate actions.

“Critically, this solution doesn't require the entire industry to transform its current operations to produce communications in accordance with new standards,” Chainlink emphasized. 

In contrast to earlier initiatives aimed at standardizing communications related to corporate action events by issuers and agents, AI, oracles, and blockchains allow for the automatic processing of current unstructured data within corporate action communications.

It results in a structured output that all market participants can easily access on a blockchain and verify in real time.

Chainlink Launches Private Blockchain Transactions for Businesses

This follows Chainlink's announcement introducing new technology to assist financial institutions in preserving data privacy during transactions across blockchain networks.

These two innovative privacy-enhancing features are designed for financial entities seeking to utilize blockchain applications while guaranteeing complete end-to-end privacy.

We're excited to announce CCIP Private Transactions, enabling financial institutions to connect private blockchains to the multi-chain economy.

Australia and New Zealand Banking Group (ANZ) will be among the first financial institutions to pilot the capability for cross-chain… pic.twitter.com/1Qmm9nURqz

— Chainlink (@chainlink) October 22, 2024

They include the Blockchain Privacy Manager, which facilitates private chain integration with the public Chainlink Platform, and an encryption protocol known as CCIP Private Transactions.

The Australia and New Zealand Banking Group (ANZ Bank) will be among the first to test Chainlink's privacy-focused features.

ANZ Bank plans to implement this technology for the cross-chain settlement of tokenized real-world assets (RWAs) as part of the Monetary Authority of Singapore's tokenization initiative, Project Guardian.

Chainlink (LINK) has surged by 2.96% in the last 24 hours and is now changing hands for $12.06. As technical indicators reveal intense buying activities in the LINK market, we might expect more upward trends in the short term.