A blockchain settlement system is being built by Sydney Stock Exchange that will make a market for venture capital funds by avoiding high ASX fees.
The blockchain settlement will be promoted as a low cost alternative to the ASX by the Sydney Stock Exchange (SSX) to try attracting private equity funds and exit their investments by listing on the SSX. The distributed ledger used initially to settle trades in private companies till the regulatory approval is gained. After gaining the approval, it will settle trades in publicly listed stocks.
SSX's chief consultant of the project, Loretta Joseph said that, “We will start with a private secondary equity market for venture capital and crowdfunded start ups to register on our exchange.” SSX will be selling versions of its system which is being built with the help of consultants Bit Trade Labs, post its completion in the year 2018. It will be sold to small commodities exchanges, those of which have settlement times of up to a month.
Ms. Joseph also said that SSX have been working on the project for over a year. Later it will look to license what they build to other small inefficient markets. “We will then move to a public secondary market. VC and crowdfunding are private little markets. It will give them another market that they can come to," she said in a statement.
The idea behind this is that, by cutting out the need for blockchain "miners" to authenticate transactions, a private blockchain will increase the speed of settlement. This reduces the use of computing power.
Sydney Stock Exchange previously known as Asia Pacific Exchange, provides a listing venue for small stocks, mainly based in China. George Wang owns the exchange and so far it has only three listed stocks.
