Capital markets News

Korea Exchange owned Koscom creating unlisted securities blockchain

stock certificates

Koscom, the financial IT company majority-owned by the Korea Exchange, is creating a blockchain solution for unlisted securities. On August 6th Koscom announced it will be working with five companies to develop the platform. They are Korea Accelerator Association, KEB Hana Bank, Hana Financial Investment, Techno Park and Amicus Rex.

The Korea Exchange owns 76.6% of Koscom, with 8% held by Korea Securities Depository and the balance held by 14 securities companies. “Constant innovation” is part of Koscom’s mission.

The distributed ledger (DLT) platform will target unlisted SMEs and is slated to launch in the second half of 2019. Koscom says the benefits are to reduce the burden of managing shareholder lists and provide peace of mind to investors because of greater transparency. The ultimate aim is to increase startup funding.

Specifically, shareholder lists are invariably on Excel, and stock transactions are often slow to be reflected on the records. There’s often concern from stock buyers about whether the seller is the owner of the shares.

Each organization has a clear role in the project. The Accelerator aims to attract startups to the platform and Daejeon Techno Park will provide corporate investment information. KEB Hana Bank will provide an escrow service for payments. Legal technology company Amicus Rex will issue stock transfer agreements and stock certificates. And Koscom will provide the blockchain technology.

In May, Korea’s Financial Services Commission chose Koscom’s blockchain technology for shareholder list management and stock trading for startups. Koscom is also involved in a blockchain digital identity service in conjunction with all the major South Korean telecoms companies SK Telecom, KT and LG U+.

There’s a similar blockchain unlisted securities initiative in Finland which is backed by Nordea and OP Financial.

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