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Canadian Securities Exchange unveils blockchain clearing house

BBR Staff Writer Published 14 February 2018

The Canadian Securities Exchange (CSE) has unveiled the country's first platform for clearing and settling securities through blockchain technology.

The blockchain-based platform will allow companies to issue conventional equity and debt via tokenized securities, which will be provided to investors through security token offerings (STOs).

The platform will provide investors and the Canadian financial services community with benefits such as real-time clearing and settlement, as well as cost and error reductions.

CSE’s new platform will help to reduce the risk for investment dealers and their clients through quickly clearing and settling trades compared to the current system used for equities that needs two full business days.

It will also enable to reduce costs through avoiding the need for investment dealers to post initial and mark-to-market capital with a clearing house pending the settlement of trades.

The platform will also help in cost savings and error reductions linked with processing corporate actions such as splits, consolidations, and dividend payments,.

In addition, the platform will decrease the risk for  initial investors in STOs and investors purchasing tokens in the secondary market by formalizing the disclosure environment.

CSE has entered into a memorandum of understanding (MOU) with Kabuni Technologies, which is in line with the current announcement.

Kabuni is planning to file a prospectus with the British Columbia Securities Commission (“BCSC”) for approval to issue tokens to investors through a STO.

CSE CEO Richard Carleton said: “The Canadian Securities Exchange expects to be the first recognized exchange in Canada to introduce a fully developed blockchain platform for trading, clearing and settling tokenized securities.

“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.”

Image: The blockchain-based platform will allow companies to issue conventional equity and debt via tokenized securities. Photo: courtesy of mapichai at FreeDigitalPhotos.net.