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Six South Korean entities have teamed up for a blockchain initiative focused on the trading on unlisted securities, CoinDesk reported citing a report from local news outlet Chosun Ilbo.
Participating organizations include Koscom, KEB Hana Bank, Hana Financial Investment, Daejeon Technopark, Amicus Lex, and Korea Accelerator Association.
The objective is to revitalize the unlisted securities market, which faces a number of challenges including expensive, slow and insecure transactions which limits the accessibility to a wide range of investors.
The cost involved in the securities value chain is a major impediment for small scale companies, who often resort to the largely manual OTC market for their unlisted securities. These brokerage networks are not only prone to errors, but also difficult to access and give investors very little opportunity to buy early-stage equities.
This acts as a major challenge for medium and small scale companies who want to raise capital is a cost-effective and quick manner. Even if they successfully manage to sell their stock, liquidity remains meager due to the lack of a diverse and active investor base.
The consortium aims to leverage blockchain technology to address these issues. The participating organizations plan to launch the platform later this year.
According to the press release, the entire unlisted share transaction process will be transparently managed within the blockchain platform.
“Small- and medium-sized venture firms are expected to reduce the burden of managing shareholders, investors will be less anxious when trading unlisted stocks, and eventually the startup's financing market will be activated,” the press release reads (via online translation).
KEB Hana will be handling the escrow, while Hana Financial Investments will be providing support to the unlisted companies. Amicus Lex will be responsible for giving legal advice, and the accelerator association and the technopark will be responsible for marketing and promotion of the platform.
The platform has been reportedly in the works since May, when Koscom was approved by the Financial Services Commission (FSC) to develop the system under its sandbox program.
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