Toronto-based TMX Group Ltd. has developed a blockchain-based system that aims to improve the settlement process for Natural Gas Exchange (NGX), the exchange firm’s natural gas trading facility.

Specifically, TMX Group has built a prototype with Toronto-based blockchain developer Nuco Inc. that uses distributed ledger technology to enhance the tracking of natural gas flows.

“The prototype is designed to optimize the NGX natural gas settlement process for clients by providing a transparent view of gas movements across locations and enabling participants to more accurately report their positions,” TMX Group says in a news release.

The new system could also enhance delivery and payment processing; reduce the risk of supply shortfalls; and provide secure transactional data, it adds.

“This exciting new prototype is designed to more accurately and efficiently track activity and provide clients with valuable analytics on natural gas movements, while preserving the confidentiality and integrity of the data,” says Steve Lappin, president and CEO of NGX, in a statement.

Proponents of blockchain technology are touting it as a potential replacement for existing clearing and settlement systems that could increase efficiency, reduce costs and improve security in several markets.

“TMX’s digital strategy forges on in pursuit of tangible business applications for emerging technologies across our diverse enterprise,” says John Lee, vice president, innovation and enterprise delivery, with TMX Group, in a statement.