The WEALTHTECH Book

Investment and Issuance Distributed in Blockchain

By Zeng Ziling

VP, ZONFIN China

Current State of Securities Practice with Pain Points

In the financial instruments issuing procedure lies an old problem. All institutions use their own heterogeneous information technology (IT) systems, which are incompatible with each other. If the bond and share securities are not traded in exchanges, which we call over-the-counter (OTC) trading, there is no dominant system to link the trading parties together. The participants of this procedure include the securities issuer, the subscriber, the funds, fund of funds (FOF), or other types of financial intermediary and the final investor. Some say that the most used “tech” here is Microsoft Excel. In most countries, we have exchanges or other types of information centres performing the task of bookkeeping and clearance. In practice, those central servers do not cover all securities businesses. Only part of standard commodities are allowed to trade.

Stock exchanges do not cover: some non-standardized securities or other types of financial instruments or fundraising activities (e.g. trust, unlisted bonds). The initial fundraising takes part in the primary issuing, but there can even be a multilayer structure of investment participants. We have multiple exchanges or other trading centres even within one country, which is a fractioned marketplace. Before blockchain technology, there was no good way to synchronize trading information among multiple ...