Zou Chuanwei: The combination of central securities depository and blockchain will bring many benefits

On April 6, Zou Chuanwei, chief economist of PlatON, published the "Logic and Mechanism of Blockchain Applied to Post-processing of Financial Transactions", saying that the application of blockchain to post-processing of financial transactions is a paradigm shift from the account paradigm to the Token paradigm . But the paradigm shift alone is not enough to support the necessity and rationality of introducing blockchain in the post-processing of financial transactions. The key is to prove that blockchain can improve efficiency, reduce risks, and retain the advantages of the current model. At the same time, Zou Chuanwei said that if the central securities depository (CSD) settlement and account maintenance functions are implemented through the blockchain, then the central securities depository (CSD) and the securities settlement system (SSS) will be integrated, and all market participants will share a ledger , Which will bring many benefits:

1. Simplify and automate post-transaction processing work through distributed, simultaneous and shared securities ownership records, reducing the workload of CSD and various intermediaries in the background for reconciliation and confirmation of transaction details

2. Shorten the time required for settlement and reduce the exposure of settlement risk;

3. Information about the transaction is shared by both parties to the transaction, which can promote automatic liquidation;

4. Shorten the custody chain so that investors can directly hold securities and reduce the legal, operational risks and intermediary costs undertaken by investors;

5. Good traceability and high transparency;

6. Decentralization and multiple backups can improve system security and pressure resistance;

7. Tokenized securities holders can use smart contract programming to automate management of securities to achieve flexible risk transfer, hedging and resource allocation functions.