The Canadian Securities Exchange is planning to launch a securities clearing and settlement platform based in blockchain technology.
The platform would allow companies to issue conventional equity and debt through tokenized securities, which would be offered to investors through Security Token Offerings. The CSE says that, unlike blockchain-based cryptocurrencies, the STOs will be subject to full regulation by applicable securities commissions.
“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,” said Richard Carleton, CEO of the CSE.
“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. By harnessing this technology, the potential exists to extend corporate finance beyond the limits of traditional equity and debt offerings. We look forward to working with regulators and with corporations seeking to raise capital through STOs to fully realize the benefits of the new platform. We believe it represents a tremendous opportunity for stakeholders in the Canadian marketplace.”
The company hopes that the benefits of the new platform will include reduction of risk for investment dealers and their clients by ensuring that trades clear and settle immediately, compared to the current system used for equities which requires two full business days; eliminating the need for investment dealers to post initial and mark-to-market capital with a clearing house pending the settlement of trades; facilitation of shareholder communications; significant oversight of STOs compared to unregulated Initial Coin Offerings; and broadened participation in tokenized security markets by providing access to new categories investors.
As part of the announcement, the CSE has signed a Memorandum of Understanding (“MOU”) with Vancouver-based Kabuni Technologies, a blockchain platform for 3D printing. Kabuni intends to file a prospectus with the British Columbia Securities Commission (BCSC) for approval to issue tokens to investors through a security token offering. The CSE licensed the necessary technology for the clearing house from New York-based Fundamental Interactions, whic has experience delivering blockchain-enabled solutions to clients in the United States and Asia.
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