China doubles down on blockchain to digitize securities industry

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China intends on leveraging blockchain technology to digitize its securities industry. Representatives from the country’s largest stock exchanges and regulatory bodies met recently to discuss the future of the securities industry, and they concurred on blockchain playing a central role.

The event was organized by the China Securities Association (SAC) and brought together securities regulators including the China Securities Regulatory Commission (CSRC). Two of the largest stock exchanges in Shanghai and Shenzhen were also in attendance, with all the attendees delving into how they were using blockchain technology to increase efficiency, reduce costs and increase transparency.

Jiang Dongxing, the deputy director of the Science and Technology Regulatory Bureau of CSRC, called on market participants to double down on their blockchain initiatives, citing benefits such as the building of a trust mechanism that could be the foundation upon which the future of China’s securities and futures industry is built.

Jiang mentioned that in its 14th Five Year Plan, the CSRC made it clear it would step up its efforts to build “an industry cloud platform, certificate network, industry big data warehouse and industry blockchain public infrastructure.”

He told the attendees, “The core function of the blockchain is to establish a trust mechanism in the network environment, and it will be a key information infrastructure for the co-governance of the securities and futures industry in the digital space after [it’s] fully digitized.”

Jiang further called on the securities industry to collaborate on the blockchain ventures. This is the best and fastest way to create a “hierarchical, unified, interconnected, safe and reliable industry blockchain public infrastructure,” he added.

Major players in the Chinese securities industry are in the advanced stages of their blockchain initiatives. Shanghai and Shenzhen stock exchanges, which together have a total market capitalization above $8 trillion, have been piloting blockchain initiatives, under the supervision of the CSRC, for listings, capital management, custody, and disclosures. The Hong Kong Exchange and Clearing have also been exploring smart contracts for post-trade settlements.

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