Financial Supervisory Service Plans to Actively Support Applying Blockchain Technology to Capital Market

Aug 03, 2018

Financial Supervisory Service (FSS) is planning to support introduction of blockchain technologies to South Korea’s financial industries.
First, it is planning to prepare a way to apply blockchain technology to both stock settlement and payment tasks that are separated between Korea Exchange and Korea Securities Depository at the same time.
FSS made its ‘Current Status and Implication of Introducing Blockchain Technology by Foreign Stock Exchanges’ report public on the 2nd. It is the first investigative report made public by Blockchain Research Department, which was established under FinTech Support Department due to reorganization of FSS.
Blockchain Research Department analyzed how foreign stock exchanges such as NASDAQ and Australia’s ASX are introducing blockchain technology and how they are using blockchain technology for financial infrastructures of capital market and presented implications.
FSS expects that it will be possible to apply blockchain technology to various tasks such as issue and trade of stocks, settlements, and rights management. However, it is predicting that it will be somewhat difficult to introduce blockchain technology to trades involving public markets.
As a result, FSS is planning to actively support relevant stock institutions with finding blockchain projects.
“Through cooperation without any boundary between industries and organizations, we need to look for and examine various projects from every aspect of stock trading.” said a representative for FSS. “Because stock settlement and payment tasks are separated in South Korea, cooperation between relevant organizations is a must.”
Actually, Korea Exchange partially applied blockchain technology to a startup stock trading system (KRX Startup Market) at the end of 2016. Korea Securities Depository finished PoC (Proof of Concept) towards electronic voting applied with blockchain at the end of last year and is planning to test it sometime during this year.
“Although settlement and payment tasks are separated in some countries, countries that carry out blockchain projects approach those tasks by forming a single consortium.” said a representative for FSS. “Due to characteristics of blockchain, it will be difficult to operate settlement and payment separately.”
Financial investment industry is welcoming such actions taken by FSS.
“Concerns from supervisory authorities are must to apply blockchain technology to financial industries.” said a representative for a blockchain consortium from a financial investment industry. “We are planning to discuss with FSS about how we are going to apply blockchain technology to actual services such as unlisted bonds.”
FSS is also seeing that it will be easy for ground network to improve processing speed of stock trading and to secure stability through closed blockchain. It also suggested cooperation between capital market and blockchain startups and it positively assessed enhancement of mutual technical capabilities and creation of jobs from startup companies.
“FSS is focusing on unfair trades involving digital currencies more than blockchain.” said a representative for FSS. “We are planning to think about and analyze how we can develop our financial industries further by applying blockchain technology.”
Staff Reporter Ryu, Geunil | ryuryu@etnews.com

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