The Canadian Securities Exchange is moving into the new era of blockchains with the introduction of a securities clearing and settlement platform that uses blockchain technology.
Under the new platform, companies can issue conventional equity and debt through tokenized securities, which would be offered to investors through Security Token Offerings or STOs.
The STOs however will be very different from blockchain-based cryptocurrencies or Initial Coin Offerings (ICOs)which are unregulated. STOs will be fully regulated by the applicable securities commissions, CSE said in a statement on Tuesday.
STOs will undergo regulated review protocols prior to being accepted for trading and there will be ongoing oversight by both an established national securities exchange and provincial securities regulators.
The platform offers real-time clearing and settlement as well as substantial reductions in costs and errors when compared to traditional clearing services.
The CSE has licensed the necessary technology for the platform from New York-based Fundamental Interactions Inc, which has extensive experience delivering blockchain-enabled solutions in the US and Asia.
“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, Chief Executive Officer of the CSE.
Extend corporate finance beyond traditional limits
“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,” Carleton added.
Kabuni set to issue first STOs?
In relation to the launch of the new platform, the exchange said it has signed a Memorandum of Understanding with Kabuni Technologies Inc, which plans to become the first company to issue STOs on a recognised securities exchange.
Kabuni, which is based in Vancouver, plans to file a prospectus with the British Columbia Securities Commission.