Myanmar’s Yangon Stock Exchange (YSX) will be establishing a Blockchain-based stock exchange with the help of Daiwa Securities Group, a Tokyo-based financial company, in order to integrate Daiwa’s equity trading into the Yangon exchange platform for the purposes of improved recordkeeping.
Currently, both Daiwa and YSX are testing the Blockchain platform and are in discussions with government officials to fully use the Blockchain concept for all YSX trading within a period of two years, after completing months of successful testing.
According to Nikkei, the Blockchain stock exchange proved worthy of use in Myanmar, despite the amount of power failures experienced in Yangon, by still allowing brokerages to check transactions and balances, as the Blockchain is not hosted on a centralized server.
The Future of Stock Exchanges
With a Blockchain stock exchange, YSX will be the first reported stock exchange to publicly trade equity on a Blockchain-based exchange, with Barclays Bank close behind with their equity swap test with Credit Suisse. These companies will pave the way for other stock exchanges to follow the growing Blockchain trend in the FinTech industry.
Using a Blockchain also increases the security of the platform to ensure that no false orders are placed and that existing orders are not altered. However, Blockchains cannot compare to a regular stock exchange’s high-speed trading due to the amount of confirmations for a successful transaction, though it is expected to be compatible with YSX’s two buy/sell order matchups per day.
In addition, the platform will be giving 24/7 access to all orders and transactions, whilst the platform can be easily accessed by brokers through simply joining the Blockchain. The only technical issues Daiwa has to focus on is firms receiving transaction data from the Blockchain, rather than sending transactions, since YSX only provides two matchups a day.
Focusing on Large Companies
London-based Funderbeam, is also creating a Blockchain stock exchange, however, they are focusing on startups whilst YSX is focusing on large companies and enterprises. Funderbeam’s model utilises tokens to represent customer equity bought and can be traded back to Fiat, Bitcoin, etc. While YSX and Daiwa may be using the token idea, it is likely that they are simply using a smart contract system rather than distributing tokens to shareholders in a company, in order to avoid creating another cryptocurrency.