The London Stock Exchange Group (LSEG) recently partnered with IBM to build a blockchain solution to digitally issue private securities of small and medium-sized enterprises (SMEs) in Europe. The new platform’s goal is to help simplify tracking and managing shareholder information by storing it all on a distributed ledger, effectively opening up new opportunities for trading and investing.
The blockchain-based platform is currently being built and tested by the LSEG’s Italian exchange operator, Borsa Italiana. It will allow SMEs in Europe to replace spreadsheets and paper-based records, in which each party often has its own version of the information, for easily accessible information that can’t be altered on the blockchain. This will, in turn, allow companies to provide more transparency and ownership.
Moreover, these advantages will allow companies to, in the future, gain the trust of potential investors, possibly expanding their access to credit as well. David Harris, head of emerging technology at LSEG, stated:
“As these companies grow they will be better at interacting with their shareholders.”
The platform is powered by Hyperledger Fabric 1.0, a blockchain framework created by an open-source group led by the Linux Foundation, whose members include both IBM and the LSEG.
Hyperledger Fabric 1.0 allows highly sensitive securities data to be held on the blockchain and be only accessible to permissioned network participants, while still being secure and immutable. This new platform is still being tested, and a time frame for when the results will be published wasn’t given.
Marie Wieck, IBM Blockchain’s General Manager, stated:
“Sharing secure and transparent critical network data across shareholder networks is difficult using traditional system. Blockchain is poised to help remove some of these barriers in traditional methods for the transfer of value – much as the Internet did for the exchange of information in the late 1990s.”
Notably, this is one of the first developments heard from the London Stock Exchange Group after it was a founding member of the then unnamed Hyperledger in 2015, as reported by CCN.com.
Blockchain technology has recently been gaining a lot of attention from private institutions looking to reduce the complexity and costs of some of their processes. Although some believe the disruptive technology is still in its infancy and the potential may be overblown, others seem to be extremely excited about it.
Earlier this month, two of Australia’s ‘big four’ banks successfully completed a blockchain trial with IBM. The blockchain used was also powered by Hyperlerdger Fabric, and the trial completely eliminated the traditional paper-intensive bank guarantee document process.
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