South Korea[1]’s Financial Supervisory Service (FSS) has advised local regulatory agencies and companies to work towards developing an integrated blockchain[2] system for stock transactions, according to an official report published[3] August 2.
The FSS undertook a detailed analysis of international stock exchange operators’ use of blockchain technology to date, focusing on existing initiatives in the U.S.[4], Japan[5], UK and Australia[6], among others.
The report concluded that a tamper-proof blockchain-based system would increase the efficiency, integrity and security of tracking and storing transactions. The report added that existing conventional systems that use a centralized ledger are both less efficient and more vulnerable to hacks.
The FSS report specifically studied U.S. exchange Nasdaq’s use of blockchain for record keeping for its private market, using a system called Nasdaq Linq[7].
It also looked into the London Stock Exchange Group’s blockchain-powered platform[8] for the issuance of private shares, as well as explorations into using blockchain for capital market infrastructure by a Japanese consortium comprised of 36 financial companies.
The most ambitious case study considered by the watchdog was the Australian Securities Exchange’s plans[9] to eventually wholly replace its existing clearing and settlement system with a permissioned, distributed ledger-based alternative.
The report considered that blockchain applications in Korea are still at a relatively early stage, taking note of plans by the Korea Exchange’s KRX Start-up Market to implement the technology for transaction settling transactions of unlisted companies, as well as a blockchain trial project underway by the state-run Korea Securities Depository[10].
On the basis of its findings, the FSS further
