Tokyo Stock Exchange Eyes Blockchain
Launch of Consortium and Proof of Concept Testing for Capital Market Infrastructure Utilizing Blockchain Technology
JPX – Tokyo Stock Exchange, Inc. (TSE) is pleased to announce that TSE, Osaka Exchange, Inc. (OSE) and Japan Securities Clearing Corporation (JSCC) (JPX group companies) will form a consortium of Japanese financial institutions to continue to conduct proof of concept (PoC) testing based on past findings and discuss the possibility of applying blockchain or distributed ledger technology (DLT *1) to capital market infrastructure both from technical and operational perspectives.
Japan Exchange Group, Inc. (JPX) established an internal research group late last year to study the applicability of DLT to capital market infrastructure. Through our research and PoC testing, we concluded that while DLT has the potential to transform the capital market structure, further research and development is still needed before actually applying DLT to capital market infrastructure.
JPX group companies will cooperate with a wide range of stakeholders, such as financial institutions and DLT engineers, to make steady progress in verifying the technology.
TSE will create a test environment for PoC using Hyperledger fabric, the open source DLT platform, in cooperation with IBM Japan Ltd.. PoC testing by the consortium will start in spring 2017.
Point 1. Launch of financial institution consortium for PoC
We will seek participation from a wide range of Japanese financial institutions (*2) in order to gather broad industrial expertise. Members of the consortium will conduct PoC testing and discuss the applicability of DLT to the capital market infrastructure, both from technical and operational perspectives.
Point 2. Facilitating technological development
DLT applications for capital market infrastructure developed by TSE, participating financial institutions, IT vendors, and DLT startups will be deployed and tested in this environment. Verifying various applications will help to identify and address technical and service issues.
Point 3. Collaboration between engineers and financial institutions
We will consider a structure for efficient information sharing between the DLT engineer community and financial institutions through efforts such as training on DLT technology by DLT engineers and training on operational workflows by financial institutions.
Partnership reduces time and cost when adopting blockchain tech.
Successful pilot managed equity swap transactions and post-trade lifecycle events.
The exchange and its partner waits for regulatory approval.
Moving to a production environment is no simple task.
New technology is expected to deliver significant results within two years.