Finnish companies including Asiakastieto, Nordea, OP, Privanet and Tieto have joined hands for the development of a new blockchain-based platform that can digitalize the share ledger, issuance and trading of non-listed company shares.
Image: Finnish collaboration to develop trading platform for non-listed shares. Photo: Courtesy of Markus Spiske/Unsplash.
Asiakastieto Group, Nordea, OP Group, Privanet and Tieto carried out the development work in Finland. This distributed ledger-based business network is presently in a proof-of-concept stage and the plan is to begin customer pilots next year.
The project also includes experts and advisory from the Finnish Tax Administration, Finnish Patent and Registration Office as well as Borenius Attorneys.
As per the collaboration, this platform could be scaled outside of Finland, as technology solutions are not geographically limited. The platform is based on open source Corda and Hyperledger Indy distributed ledger technologies.
The blockchain platform is claims to offer reliable, simple and entirely digital way for non-listed company share trading where the tokenized share register, shareholder register, issuance of new shares and secondary market trading of shares are digitized.
According to the collaboration, a significant share of Finnish household and enterprise financial assets are invested non-listed company shares. However, the trading of these assets has not yet been digitalized and it still, for the most part relies on manual processes.
This results in the shares of non-listed company lacking liquidity and the validity of shareholder information is challenging to verify for investors, financial service providers and public authorities.
The newly developed platform could change this situation. As private sector companies and public authorities are part of the same process, verifiable information can now flow seamlessly between all the stakeholders. This makes the share trade of non-listed company fully digital, liquid and easy.
Additionally, to reduce administrative burden, the new digital platform can improve accessibility and visibility to this asset class for all parties and can help in developing new financial products and aftermarket services.
Tieto blockchain solutions head Markus Hautala said: “Blockchain presents tremendous opportunities for our society by establishing a new way of creating trust. In cooperation with our customers we’ve been able to demonstrate the potential of the technology by leveraging it in creating a fully digital identity for companies as well as digitalizing the share ledger, issuance and trading of non-listed company shares. This revolutionizes the way investors and startups can transact.”
The consortium is looking to involve start-ups and investors to contribute to this initiative during the development of the business network.