The Canadian Securities Exchange (CSE) announced today its plan to introduce a blockchain-based clearing and settlement platform for security trades. The platform will allow companies to issue traditional equity or debt instruments using a digital token, called tokenized security, which will represent the company’s share.
According to the CSE, blockchain technology will allow the platform to confirm the trade orders in real-time rather than two business days taken in the conventional system.
In the official statement, Richard Carleton, CEO of the CSE, said: “This is a landmark announcement for the Canadian capital markets. 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. By harnessing this technology, the potential exists to extend corporate finance beyond the limits of traditional equity and debt offerings,” he added.
The CSE has already acquired the licence for the technology from New York-based Fundamental Interactions, but has yet to file an application with the Canadian market regulators.
Meanwhile, the exchange operators have already signed a memorandum of understanding with Vancouver-based Kabuni Technologies to issue tokens on the new platform via Security Token Offerings. With this decentralized initiative, the CSE will look to challenge the long-held monopoly of TMX Group in securities settlement.
TMX Group owns the Canadian Depository for Securities Ltd., a firm which serves as the countries primary hub for securities and fixed income clearing and settlement.
“We look forward to working with regulators and with corporations seeking to raise capital through STOs to fully realize the benefits of the new platform. We believe it represents a tremendous opportunity for stakeholders in the Canadian marketplace,” Carleton concluded.