The Canadian Securities Exchange (CSE) has announced that it is introducing a blockchain-based securities clearing and settlement platform.
The platform will enable companies to issue conventional equity and debt through tokenized securities, which would be offered to investors through Security Token Offerings (STOs). These STOs will be subject to full regulation by applicable securities commissions, the CSE said.
"The Canadian Securities Exchange expects to be the first recognized exchange in Canada to introduce a fully developed blockchain platform for trading, clearing and settling tokenized securities," said Richard Carleton, Chief Executive Officer of the CSE.
The platform will help reduce risk for investment dealers and their clients by ensuring instant clearing and settlement of trades, as compared to the current settlement system which requires two full business days following the trade date. It will also lead to cost saving and error reductions associated with processing corporate actions such as splits, consolidations, and dividend payments. In addition, it will facilitate shareholder communication.
For initial STO investors and investors purchasing tokens in the secondary market, the platform will help reduce risk by formalizing the disclosure environment. According to the official release, token issuers will be required to adhere to the same exchange requirements as conventional, non-tokenized issuers in order to achieve and maintain a listing on the CSE.
“By harnessing this [blockchain] technology, the potential exists to extend corporate finance beyond the limits of traditional equity and debt offerings. We look forward to working with regulators and with corporations seeking to raise capital through STOs to fully realize the benefits of the new platform. We believe it represents a tremendous opportunity for stakeholders in the Canadian marketplace,” Carleton added.
The CSE also announced that it has signed a Memorandum of Understanding (MOU) with Kabuni Technologies, which intends to file a prospectus with the British Columbia Securities Commission (BCSC) for approval to issue tokens to investors through a STO. Subject to meeting the requirements of the BCSC and CSE, the tokens would be traded on the CSE's existing equity trading platform, marking the first listing of a tokenized security for trading on a recognized securities exchange.
The CSE said it intends to file an application to seek approval from Canadian regulators to recognize the new clearing house.
