South Korea’s primary financial watchdog has backed the use of blockchain technology as the core infrastructure for trading stocks in the country.
First reported by domestic news publication Korea Joongang Daily, the Financial Supervisory Service (FSS) has advocated the use of blockchain for stock trading in a report focused on the subject released on Thursday. In a significant backing of the technology, the FSS called on the country’s regulatory agencies and firms to jointly work and develop an integrated blockchain system that negates the use of a conventional centralized ledger and system to track transaction.
Blockchain technology offers the promise of safer and tamper-proof transactions, the FSS report said, suggesting that conventional transaction systems with an overseer or centralized record-keeper is riddled with inefficiencies and vulnerable to hacking attacks.
The FSS also researched the use of blockchain technology among stock exchange transactions in several countries including Japan, the United States and Australia.
As reported by CCN, the Australian Securities Exchange (ASX) – Australia’s largest stock exchange – will become the world’s first major exchange operator to implement blockchain technology for its clearing and settlement system with a planned rollout in 2020. In doing so, the ASX is replacing its existing post-trade system that has been operational for the last 25 years.
In the United States, Nasdaq – the world’s second-largest stock exchange by market capitalization – has already launched Linq, a blockchain platform that enables private companies to trade their shares on the platform. The Japan Exchange Group (JPX), Asia’s largest stock exchange operator, has also established a consortium to specifically research blockchain applications in late 2016 and has since received a regulatory green-light from Japan’s financial regulator to use the decentralized technology as the code driver for its trading infrastructure.
Urging regulators, authorities and the financial industry to come together in developing a blockchain stock trading platform, an excerpt from the FSS report added:
There should be no barrier between public institutions and private companies in developing a blockchain system.
The FSS report went on to add that Korea’s embrace of blockchain is still in a preliminary stage, despite the notable successes of major trails including a 7-month pilot of imports and exports from Korean shipping ports tapping a blockchain developed by Samsung SDS, the IT subsidiary of electronics giant Samsung.
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