Shinhan Financial Investment will soon be offering peer-to-peer (P2P) stock lending via the blockchain.
When the new service is introduced this year, individuals will be able to borrow and lend securities with other individuals directly, rather than going through an intermediary. The Economic News and other local Korean media reported the news.
Securities lending and borrowing transactions are normally inefficient and expensive for anyone but larger investors. Commissions can be high and accurate information difficult to obtain. With a P2P service, individual owners of stock should be able to easily and cheaply lend their shares directly to others, earning a fee in the process. Individual short sellers will potentially be able to borrow stock from willing counterparties without having to pay exorbitant fees to large institutions.
Shinhan Financial Investment, which is a brokerage related to the country’s second largest banking group by assets, is developing the capability in cooperation with Directional, a Korean company that has been permitted by the Financial Service Commission (FSC) to provide stock lending and borrowing as part of the government’s sandbox initiative. Sandboxes, which are being aggressively pushed by the current administration, allow for a temporary lifting of regulations for the testing of innovative technologies and services.
Shinhan Bank has been aggressive in its pursuit of blockchain solutions. Two years ago, it started using the technology for the verification of gold bars. Since then, it has utilized it for interest rate swaps and and cross border remittances. In May this year, it was reported that the bank would use the technology for loan verification, enabling customers to electronically submit documents that previously had to be…