South Korea’s securities exchange, the Korea Exchange (KRX) is developing a blockchain platform to link sellers and buyers to trade securities directly.
Korea’s stock exchange operator is reportedly seeking to launch a platform powered by blockchain technology to stir up the off-board trading market that will also enable the trading of non-listed securities, often exchanged directly between dealers.
According to The Korea Times, the Korea Exchange has initiated “preliminary steps” to develop the new blockchain-powered platform that will help trade securities between buyers and sellers directly, according to an official source of the publication.
The official stated:
Though many steps remain before the system’s official launch, we expect this would help off-board dealers to trade more easily by saving their costs and efforts in seeking trade partners.
The innovation is seen as a measure to simply existing after-hours dealings which occur between dealers through securities firms, middlemen in such scenarios. The outsize dealing market in South Korea reportedly stands at 56 trillion won, approximately USD $45 billion.
Exchanges Rushing to Blockchain Tech
The news of the KRX looking into blockchain technology comes at a time when several other stock exchange operators around the world are actively participating in ways through which blockchain technology can be applied to trades, settlement and post-trade processes.
One of the more prominent examples is that of the Australian Stock Exchange (ASX). The ASX –following nearly a year of hinting at looking into blockchain technology – recently invested in New York-based blockchain startup Digital Asset Holdings’ recent funding round. The deal also saw the firm roped in to develop blockchain technology in an experiment that will run alongside the existing clearing and settlement system (CHESS), used by the ASX. The goal is for the blockchain-based system to ultimately replace CHESS.
More recently, the operator of Asia’s largest stock exchange – the Tokyo Stock Exchange, also revealed that the group will begin experimenting with blockchain technology for post-trade solutions, after partnering up with IBM Japan for the project. The proof-of-concept testing will begin this month in March.
In November 2015, several prominent exchanges, trading firms and banks in Europe, led by the London Stock Exchange, came together to form a blockchain-based settlement group to enable cheaper, more efficient and quicker ways of settling securities trades. A steering committee has already been formed to help with the process of realizing blockchain solutions for post-trade processes. The group is currently operating under the working title “Post Trade Distributed Ledger Working Group.”
Image from Shutterstock.