Daiwa, the Second Largest Securities Exchange In Japan Rounds Up Blockchain Proof-of-concept For Integration In The Capital Market

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According to a press release published yesterday, the 19th of February, the second largest securities exchange in Japan, Daiwa Securities Group, has just completed a blockchain pilot. The proof-of-concept involved testing the implementation of blockchain technology in post-trade processing, particularly trade matching.

Securities Firm, Daiwa, Complete Blockchain Proof-of-concept

The proof-of-concept by the Japanese company was named JPX Proof-of-Concept Testing for the implementation of blockchain technology in the Capital Market Infrastructure. About 26 companies were involved in the pilot. This included system providers, financial institutions and institutional investors. They were able to complete the second phase of the pilot which happens to be the last phase. The overall goal is to improve the efficiency of blockchain technology in post-trade processes.

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The result of the pilot revealed that the implementation of workflow processes and standardized specifications on the system will dramatically reduce the cost of development of new products and services. It also proved that development will become easier and more efficient when blockchain technology is implemented. In the press release, the firm stated that it believes this integration is going to be highly useful to the ultimate beneficiaries, the investors.

In the press release, the company admitted that a lot of consideration needs to be made before a standardized system is implemented using blockchain technology. It stated:

“We have to develop a new consortium or organization that would be responsible for system development, budget management, fund development, and system administration. We will discuss more with the market participants later and conduct a feasibility study to put the concept into action.”

Daiwa Isn’t The Only Company Testing Blockchain-based Systems

On the 18th of February, the second largest bank per assets in Japan, Sumitomo Mitsui Banking Corporation announced that it had completed a PoC using R3’s blockchain technology. The platform that was used was the Marco Polo trade finance system. Note that the SMBC is the only bank in Japan that is participating in Marco Polo. The bank said that it entered into a partnership with Mitsui & Co. to boost efficiency in trade processes. The announcement was as follows:

“The proof-of-concept was done between Mitsui & Co and SMBC. The aim is to improve productivity in trade operations by testing different modules like Payment Commitment (Payment Undertaking) and Receivable Finance. SMBC intends to commercialize Marco Polo in the first financial half of 2019 after the PoC is verified.”

Marco Polo is a joint venture that was launched by TradeX and R3 in 2017. The project aims at using DLT to process trade finance. There are already 15 consortium banks leveraging R3’s Corda Settler in the Marco Polo consortium.

Yesterday, a research result about the possible implementations of blockchain technology was published by the central bank of Japan. The report was about how digital currencies can be integrated into the existing monetary system in the country.

Do you think the impact of blockchain technology in the trade finance sector will be significant? Will other banks in Japan and around the world be propelled to explore this option in time? Share your thoughts in the comment section.


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