A blockchain solution designed to replace the paper securities trading certificates commonly issued to private companies today is being built by Italian stock exchange Borsa Italiana (part of the London Stock Exchange Group (LSEG)) and IBM.
Designed to simplify the tracking and management of shareholding information, the new system will create a distributed shared registry containing a record of all shareholder transactions (a blockchain). Because the transaction record is stored across all machines in the chain and updated in real-time, hacking it is virtually impossible.
Raffaele Jerusalmi, CEO of Borsa Italiana, said, "Through our work with IBM on this blockchain solution, Borsa Italiana is taking the lead in transforming the way European SMEs can manage their shareholder data and at the same time expand credit access - all on a trusted digital platform."
Private SMBs traditionally struggle to access public stock exchange networks. Borsa Italiana and IBM want to enable SMBs to establish new trading networks and to obtain funding by giving them the security to share financial data in public arenas.
IBM has worked with blockchain in the financial sector before, most recently securing cross-border trade with a new trade finance platform. Like that version, the Borsa blockchain will be built on the open-source Hyperledger Fabric v1.0 framework. As well as being highly secure, the system is designed to be interoperable with LSEG's existing systems.
"Sharing secure and transparent critical network data across shareholder networks is difficult using a traditional system," said Marie Wieck, general manager, IBM Blockchain. "Blockchain is poised to help remove some of these barriers in traditional methods for the transfer of value - much as the Internet did for the exchange of information in the late 1990s."
The solution is undergoing an initial test phase with a small group of partners and clients.
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