CSE To Implement Blockchain Platform for Clearing & Settling Securities

The Canadian Securities Exchange (CSE) released an official announcement of establishing an unique blockchain use case for ethereum based securities clearing and settlement platform. This platform will enable the companies to raise capital through security token that will be available to the investors via Security Token Offerings (STO).

A unique Blockchain use case for clearing and settling tokenized securities

Recently, the Canadian Securities Exchange (CSE) announced the introduction of securities clearing and settlement platform that will be based on the ethereum blockchain. The focus of the platform is to allow companies to raise capital through equity and debt with security tokens.

CSE has basically created a revised version of ICO that is called Security Token Offerings (STO) that will be subject to the regulations as applied by securities commissions. Moreover, the fundraising route through STOs will be open to new as well as established companies. It has been expected that the platform will provide a number of benefits to both the investors and the Canadian financial services community. These benefits would include real-time clearing and settlement along with the reduction in the cost and errors.

Listing more than 350 unique issues, CSE provides smart routing, market information, trade execution, risk management and compliance to the Canadian listed instruments. CSE is also planning to file an application for the approval of Canadian regulators in order to get the recognition as a new clearing house. This will be a first blockchain use case for settlement of tokenized securities.

According to the CEO of CSE, Richard Carleton:

“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.”

Vancouver-based Kabuni Technologies is expected to be the first company to issue an STO, once it gets the permission from British Columbia Securities Commission.

Difference between ICO and STO? What does an STO offer?

Carleton further commented:

“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.”

In its press release, CSE gave a brief rundown of how it this new platform will offer a variety of benefits:

• Substantial cost saving by eliminating the investment dealers
• Risk reduction in STOs for initial investors through disclosure environment
• Reduced risk for investment dealers and their clients through clear and prompt settlement
• STO oversight by provincial securities regulators and established national securities
• Error reductions and cost savings in corporate action processing
• Access to new investors’ categories to broaden the participation
• Improved shareholder communication

CSE has already licensed the technology necessary for its clearing house.

This is a huge step that is going to help companies and investors massively in the clearing and settlement phase of an exchange. What do you think of CME’s innovative step? Are you ready to trade in STOs? Let us know below!