According to Coindesk's August 8 report, South Korea is developing a blockchain-based unlisted securities trading platform.
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Today's unlisted securities are trading at high prices, slow speeds and low security. The new platform is designed to help a wider range of investors improve the efficiency of unlisted securities transactions. Six Korean entities participated in the project, including the Korean stock exchange IT departments Koscom, Hana Bank, Hana Financial Investment, Daejeon Science Park, startup Amicus Lex and an accelerator association. They hope to establish the system in the second half of this year.
In South Korea, stock trading in small companies is a “blind spot”. The cost associated with the securities value chain may be banned for companies that are not large enough to enter the main board of the Korea Stock Exchange, Kosdaq, Korea's innovative stock market, or Konex, a Korean SME-specific stock market. Currently, unlisted stocks are traded through over-the-counter trading, where people accept orders via phone or broker and record transactions in spreadsheets. This process is both laborious and error-prone, and most investors have no access to these brokerage networks and have little chance of buying early stocks.
This is the bottleneck for the development of innovative companies in Korea. They cannot raise money cheaply and quickly. And even if it is really successful in selling stocks, liquidity is poor because of the lack of a broad and active investor base.
The participating alliances believe that blockchain can help bridge the market gap. They said that the blockchain enables transactions to be transparent, and that these transactions and the resulting shareholding records can be kept steadily at moderate cost until the shareholder register is officially updated.
Asiana Bank will handle third-party custody, Hana Financial Investment will provide support for unlisted companies, Amicus Lex will provide legal advice, and Accelerator Association and Daejeon Science Park will be responsible for marketing and promoting the platform.
The Korea Stock Exchange, which owns 76.6% of Koscom, has been committed to promoting the development of blockchain. Last month, it signed an agreement with Samsung Electronics, three South Korean mobile operators and two banks to develop a blockchain mobile digital identification system. At the end of 2018, the Korea Stock Exchange stated that it is using the blockchain to develop a collateral inspection system.
The unlisted securities platform began operations in May, when Koscom was approved by the Financial Services Commission (FSC) to create the system under the sandbox project. Sandbox projects can be exempt from some existing laws and regulations, allowing innovative services to be tested in the real world.