Guotai Junan Partners with Shanghai Stock Exchange to Improve Industry with Blockchain
Guotai Junan Securities, one of the largest investment banks and securities companies in China, is working with the Shanghai Stock Exchange and the Shenzhen Stock Exchange to jointly develop the application scenarios and the supervision issue of the blockchain.
According to Shanghai Securities News, the Shenzhen Stock Exchange will conduct research on topic of “how to use the blockchain to build an ABS (assets backed security) distribution platform”, and the Shanghai Stock Exchange will focus on “the application and supervision of the blockchain in over-the-counter (OTC) trading.”
Yu Feng, the director of information technology at Guotai Junan explained that, through the co-construction of blockchain, some attributes of non-standard OTC option products can be converted into standard attributes; for the part that is difficult to reach consensus and hard to be tracked can also be information transparent and traceable.
For instance, Yu demonstrated the two core elements of using blockchain to trade OTC options, the first one is the smart contracts. After build a project upon the blockchain, all the operating processes of the project will be managed by corresponding rules that will be triggered at a certain time point. There are also certain rules for the fund flow. By using smart contracts, the intermediate links of the project can be controlled, and a complete tracking chain can also be formed to reduce the risk in the process in a certain extent.
The distributed ledger is the second core element of the blockchain. Yu Feng said that the distributed ledger makes the information of each participant relatively symmetrical. After putting the project on a blockchain, the whole progress of the project and the capital investment can be monitored and tracked by every relevant participants.
This time, Guotai Junan, Shanghai Stock Exchange and Shenzhen Stock Exchange have agree to cooperate on improving the insurance and other financial application scenarios with the use of blockchain and is aiming to set up supervision rules for the blockchain usage.