The Canadian Securities Exchange (CSE) has developed a securities clearing and settlement platform using blockchain technology.
The platform allows companies to issue equity and debt through tokenised securities offered to investors via security token offerings (STO). Unlike initial coin offerings (ICOs), STOs are subject to full regulation by securities commissions.
CSE claims the platform significantly reduces risk for investors, dealers and their clients by ensuring trades are cleared and settled immediately. Traditional clearing for equities requires two full business days following the transaction date to settle each trade.
“Our platform represents an intersection between blockchain and the capital markets that delivers on blockchain’s promise to disrupt conventional transaction and record-keeping mechanisms, thereby providing tangible benefits for market stakeholders,” said Richard Carleton, CEO at CSE.
A number of major exchange operators and financial institutions have explored the use of blockchain technology for clearing and settlement in a bid to reduce costs and risk for investors.
The Australian Securities Exchange opted to replace all of its post-trade functions with a blockchain-based clearing and settlement system after two years of testing with blockchain technology provider, Digital Asset Holdings.
Carleton described the development of CSE’s blockchain clearing and settlement platform as a landmark announcement for Canadian capital markets.
“The Canadian Securities Exchange expects to be the first recognised exchange in Canada to introduce a fully developed blockchain platform for trading, clearing and settling tokenised securities,” he added.
Alongside the launch of new platform, CSE has signed an agreement with Kabuni Technologies, based in Vancouver, to file a prospectus with the British Columbia Securities Commission for approval to issue tokens to investors through a STO.
If regulatory requirements are met the tokens would be traded on CSE’s existing equity trading platform, marking the first time a tokenised security has been listed for trading on a recognised securities exchange.