South Korea's Shinhan Financial Investment to develop blockchain-based stock lending platform
Mon, 05 Aug 2019, 06:56 am UTC
Shinhan Financial Investment, the brokerage arm of South Korea’s oldest banking institution Shinhan Bank, has reportedly signed an agreement with financial service provider Directional to develop a blockchain-based, peer-to-peer (P2P) stock lending platform, according to local news reports.
As per Economic News, the new service will allow people to borrow and lend securities directly from other individuals, bypassing an intermediary.
Directional has been authorized by the Financial Service Commission to provide stock lending and borrowing as part of the sandbox initiative of the country.
Lending and borrowing securities have been seen as inefficient and expensive for anyone except large investors. Commissions tend to skyrocket, and securing accurate information can be challenging. But with P2P service, individual stock owners can lend their holdings to others on a cheaper and faster platform, while earning a fee in the process. Individual short sellers can also borrow stock from willing counterparties without the need for massive customary payments.
Last May, Shinhan Bank has unveiled a blockchain-based platform to hasten loan process. It utilizes blockchain technology to verify loan application and documents without face-to-face interaction, in a bid to improve efficiency and processing time while lowering associated administrative cost.
The bank has been eyeing to expand the use of blockchain technology in its processes since last year. In fact, it fully embraced blockchain technology with transactions that involve Interest Rate Swap and smart contracts.
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