CSE Unveils Blockchain-Based Clearing and Settling Platform

The Canadian Securities Exchange (CSE) announced that it is introducing a securities clearing and settlement platform utilizing blockchain technology. According to the CSE, the platform will enable companies to issue conventional equity and debt through tokenized securities, which would be offered to investors through Security Token Offerings (STOs) which will be subject to full regulation by applicable securities commissions.

The CSE has stated that the benefits of the new platform include:

  • Reduction of risk for investment dealers and their clients by ensuring that trades clear and settle immediately, compared to the current system used for equities which requires two full business days following the trade date to settle each trade;

  • Substantial cost savings achieved by eliminating the need for investment dealers to post initial and mark-to-market capital with a clearing house pending the settlement of trades;

  • Cost savings and error reductions associated with processing corporate actions (such as splits, consolidations, and dividend payments);

  • Facilitation of shareholder communications;

  • Reduction of risk for the initial investors in STOs and for investors purchasing tokens in the secondary market by formalizing the disclosure environment. Token issuers will be required to adhere to the same Exchange requirements as conventional, non-tokenized issuers in order to achieve and maintain a listing on the CSE;

  • Significant oversight of STOs compared to unregulated Initial Coin Offerings, including regulated review protocols for STOs prior to a token’s acceptance for trading, and ongoing oversight by both an established national securities exchange and provincial securities regulators; and

  • Broadened participation in tokenized security markets by enabling access for new categories of investors.

You can read more here.

DISCLAIMER: This post is intended to convey general information about legal issues and developments as of the date above. It does not constitute legal advice and must not be treated or relied on as such.