Mizuho Bank, Ltd., a leading financial institution headquartered in Japan, along with Fujitsu Limited, and Fujitsu Laboratories Ltd. today announced that they have jointly conducted an operational trial for cross-border securities transactions, from December 2015 to February 2016, using blockchain technology.
Fujitsu, a leading Japanese information and communication technology (ICT) company, offers a full range of technology products, solutions, and services. Fujitsu Limited reported consolidated revenues of 4.8 trillion yen (US$40 billion) for the fiscal year ended March 31, 2015.
By integrating their relative strengths – Mizuho Bank's expertise in post-trade processes and the expertise of Fujitsu and Fujitsu Laboratories in designing and building payment systems, as well as in applied blockchain technology – the three companies intended to create an “exceptionally convenient financial system” that reduces the risks associated with cross-border securities transactions, such as price fluctuations.
Revealing the details of the joint trial, the companies said the trial aimed to enable low-cost, low-risk cross-border securities transactions by developing a system utilizing blockchain technology.
It usually takes three days from trade execution to final settlement due to the complexity of the process for cross-border securities transactions. Blockchain technology can shorten this time from three days to same day settlement as it has the ability to almost instantly share matched trade information in the post-trade process as data that cannot be tampered with.
“Blockchain technology greatly reduces time required for settlement post-trade process”, the companies said.
Using the blockchain Open Assets Protocol (a protocol that represents assets, such as stocks, over the transactions of the virtual currency Bitcoin), the companies built a blockchain-forming system in Fujitsu's cloud environment, recording the information from a confirmation as one linked block. In the system, continuously generated blocks containing trade information were chronologically linked as blockchain, becoming information that could not be tampered.
“[B]ecause the information could be shared between multiple companies, the partners confirmed that it was possible to shorten the time required in the post-trade process”, the report said.
The three companies will use the results obtained in this operational trial to explore the practical application of blockchain technology to cross-border securities transactions from March 2016.
