Shenzhen Stock Exchange Release Blockchain-based Credit Reporting Network
November 24, Shenzhen-The Shenzhen Stock Exchange and Zhongguancun Equity Exchange Service Group (hereinafter referred to as “Equity Exchange Group”) signed “The Agreement on Technical Support and Comprehensive Services Provided by Shenzhen Stock Exchange to the Equity Exchange Group”. Meanwhile Shenzhen Stock Exchange also released the blockchain-based credit reporting system- Zhengxinlian.
According to the report, the consortium blockchain network is developed by Shenezhen Stock Exchange along with other 5 local equity OTC exchange center. The development of the network has been initiated in June 2016. With trustless and distributed features of blockchain technology, the business information of agencies are shared among all equity OTC trading centers. The system has defined the data structure and authority hierarchy of credit rating among agencies.
Su Xusheng, GM Assistant of Communications Corporation of Shenzhen Stock Exchange , introduced and demonstrated the operation of Zhengxinlian.
As of August 2017, there are 40 regional equity trading centers throughout the country. These regional markets have gradually developed but also isolated. Due to the lack of effective technical means to achieve communication between traders, the information systems are isolated from each other and the information flow is poor. The blockchain has enabled intermediary institutions to have a uniform standard. The system is hoped to bring competiveness by constructing a brand-new inter-operation relations. Zhengxinglian is the first blockchain network that was brought online in the industry.
The next step is to promote the system among group members, exploring more business scenarios based on blockchain features.
Currently in China, there are 4 layers of in the capital market.
Shanghai Stock Exchange and Shenzhen Stock Exchange are considered the top player in China’s capital markets as they are open to corporate and individual investors and are allowed to run IPO constantly. They are often referred as” the first board”.
Small and Medium Enterprises (SME) Board: SME board is under SZSE and considered the Second Board with good liquidity.
NEEQ is the third board with limited liquidity since it is not open to individual investors.
The OTC equity market is considered the fourth board with its poor liquidity, the counterpart of pinksheet OTC market in USA.
The Zhongguancun Equity Exchange Service Group is one of “the fourth board” exchanges. Obviously, the organization is hoping that the adoption of blockchain technology would bring them more opportunities.