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Monday, November 30, 2020

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  • The blockchain-powered trades aim to simplify trading with unlisted private-sector firms.
  • Shenzhen Stock Exchange started this project as part of the Beijing Regional Trading Center.
  • The Shanghai Stock Exchange also intends to conduct a pilot for blockchain-backed trading.

The Shenzhen Stock Exchange, one of the biggest exchanges in the Asia-pacific region is planning to co-launch a blockchain solution to help streamline trading with unlisted firms in the private sector. A report unveiled this news on October 2, noting that the exchange created this platform as part of the Beijing Regional Trading Center. Reportedly, the Beijing Fourth Board Market (BFBM), the city’s regional equity market will help co-pilot this platform.

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According to the report, both groups aim to integrate the blockchain to minimize the cost of information asymmetry, standardize corporate equity management, and play the function of market equity efficiently. Per Ge Yimiao, the inspector of the Information Center of the China Securities Regulatory Commission, both the SSE and BFBM seek to provide custody services.

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Yimiao went on to state that,

“We expect to get credibility, to reduce the cost of information asymmetry, standardize corporate equity management, and better leverage the function of market equity financing to lay a solid foundation for non-listed companies’ share transfer transactions. Also, it expects to implement equity financing and the future to a higher level of capital market.”

Increasing focus on blockchain-backed trading

Before the Shenzhen Stock Exchange unveiled that it seeks to launch blockchain-powered trades, the Shanghai Stock Exchange announced that it intends to run a trial for a blockchain-powered trading platform. A report unveiled this news on September 30, noting that the Shanghai Stock Exchange plans to conduct this pilot in association with the China Securities Regulatory Commission. Per the publication, the exchange chose to operate on the Wutong Chain, a blockchain platform developed by the Tongji Blockchain Research Institute.

Explaining why Wutong Chain was the best option, the director of the Shanghai Blockchain Technology Research Center, and dean of the Tongji Blockchain Research Institute, Ma Xiaofeng, said that it is safe, autonomous, and controllable. Additionally, the Wutong chain boasts a rich industrial financial ecology, which includes players from different sectors, including finance, industry, justice, and government.

According to the Shanghai Stock Exchange, leveraging blockchain technology can help address multiple issues in the trading. These include high operation costs, lengthy business processes, multiple supervision, inconsistent standards, and centralization among others.

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