All is set as South Korea begins the development of a blockchain platform to take care of the trading of unlisted securities, according to a report in the Chosun Ilbo.
The goal is to make more accessible and efficient transactions that are now expensive, slow and insecure to a wider range of investors.
The big project involves six local participants such as Koscom the IT arm of Korea Exchange, KEB Hana Bank, Hana Financial Investment, Daejeon Technopark, Amicus Lex (a startup) and an association for accelerators. They are targeting the second half of the year to have the system in place.
Since the costs associated with the securities value chain does not allow companies not yet large enough for the Kospi main board, the Kosdaq secondary board or the Korea New Exchange (Konex) therefore, the trading of shares in smallers companies in South Korea is still in dark ages.
Now with people taking orders by phone or messenger and initially recording transactions on Excel spreadsheets as well, currently, unlisted shares have really changed hands in an OTC manner.
The process is somewhat tasking and subject to error, as most investors are unable to access to these brokerage networks and as such couldn't have enough opportunity of buying early-stage equities.
This is where blochchain comes in according to the six participating project developers as they rightly believes that blockchain can help address the gaps in the market. As it will allow for transactions to be made transparently and a record of these trades and the resulting holdings maintained in a stable, cost effective way until the shareholder registry is formally updated.
Each participants has a defined job to do as KEB Hana will handle escrow, Hana Financial Investments will provide support to the unlisted companies then Amicus Lex will offer legal advice, while the accelerator association and the marketing and promotion for the platform will be given a good touch by the techno park Koscom, which is 76.6% owned by the Korea Exchange, has been working for some time on blockchain-related developments.
It was noted that last month it also signed an agreement with Samsung Electronics, two banks and the three South Korean mobile carriers to develop a mobile digital identification system using the blockchain.
Before then in late 2018, they said that they were developing a collateral checking system using blockchain as well.
Meanwhile the unlisted securities platform has been undergoing development since May, when Koscom received approval from the Financial Services Commission (FSC) to create the system under much thought about ‘sandbox program’ that allows for the real-world testing of innovative services by exempting them from some existing laws and regulations.
Credits: Richard Meyer.
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