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China extends use of blockchain for securities

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China’s main stock exchanges, the regulator CSRC and the main industry body China Securities Association, all have blockchain initiatives.

At a recent conference, four initiatives that use enterprise blockchain in the securities sector were discussed. The China Securities Regulatory Commission (CSRC) has a blockchain securities custody solution. The stock exchanges of Shenzhen and Shanghai are using blockchain and integrated their solution with the CSRC for supervision, as previously reported. Use cases include listings, custody, transactions, capital management and disclosures.

Two more recent solutions are from the China Securities Association (SAC) and China Securities Index (CSI). SAC launched the Securities Industry Alliance Chain in January this year which standardizes electronic paper submissions. It’s using it to evaluate the quality of investment banking practices.

And CSI integrated its Over-the-Counter (OTC) Alliance Chain with the CSRC’s Central Chain of Custody solution in the middle of this year. CSI is a joint venture between the Shenzhen and Shanghai Stock Exchanges. The first application on the CSI’s OTC platform is the EasySign electronic signature solution. It aims to get consortium members to jointly build various forms that can be used on the platform.

Meanwhile, last year Hong Kong Exchanges and Clearing (HKEX) announced plans to use smart contracts for its post-trade settlement solution HKEX Synapse. This handles transactions for international investors buying securities on China’s mainland exchanges. Notably, the solution uses smart contracts but not blockchain. It plans to launch in early 2022.

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