Cross-border stock trading in Asia will use blockchain

 Cross-border stock trading in Asia will use blockchain

ADB has just launched a project to use blockchain technology for cross-border securities trading in the Asia-Pacific.

Cross-border securities transactions within ASEAN+3 (10 ASEAN countries and 3 Northeast Asian countries including Japan, Korea, and China) are now handled through a global network. This network consists of custodian and correspondent banks, through global centers in the US or Europe. Therefore, the processing of intra-regional transactions within ASEAN+3 takes at least two days, due to time differences as well as different working hours of markets in the same time zone.

According to ADB, directly connecting institutions in a blockchain network can reduce transaction costs. Besides, this activity also reduces settlement risk which is the possibility of securities not being traded within an agreed time frame.

The bank plans to work with leading blockchain companies to find ways to develop a way to directly connect central banks and securities depositories in the ASEAN+3 region in a blockchain network.

The project will be implemented in two phases: the design phase, to be completed by the end of March 2022; The prototype construction phase is expected to be completed in the second quarter of 2022.

The results will be discussed with ASEAN+3 government officials and members of the Asia Bond Market Initiative's Cross-Border Payments Infrastructure Forum, including central banks and securities custodians throughout the region.

ADB is working with ConsenSys, Fujitsu, R3 and Soramitsu on this project. The project will also assess the interoperability of systems and the feasibility of central bank digital currencies in the region. The project is supported by ADB's Digital Innovation Sandbox, a platform for public and private sector partners to collaborate on digital solutions.