In a significant move that continues its recent series of business-centric decisions, France gave its nod this Friday to trade unlisted securities through blockchain technology. The news comes in midst of the French government’s attempts to establish Paris’ reputation as a hub for financial innovation and business technology.
The new rules that accompanied the decision would essentially mean that financial institutions, banks, and FinTech companies can easily setup blockchain platforms that could trade in unlisted securities instantly, leaving no requirement for liaisons such as any custodian banks or financial brokers.
However, securities that are listed on financial exchanges will still have the requirement to pass through custodians and clearing houses.
Establishing Paris as Pro-business
The French Finance Minister spoke to the press about the move, saying
“The use of this new technology will allow FinTech firms and other financial actors to develop new ways of trading securities that are faster, cheaper, more transparent and safer.”
He added that the new rules would be “another asset for Paris’ attractiveness as a financial center.” The country is actively seeking to establish Paris as a friendly region for FinTech companies, a majority of which still favor London over the City of Light.
France wants to change that, and they show their efforts through recent labor reform, their assurances of setting up more international schools, and the payroll tax cuts. While some of these decisions have had their encounters with criticism, they have largely been welcomed by the business community as they would mostly seem to have positive effects on the functionalities of these organizations.
Is it really beneficial?
Coming back to this most recent decision in regard to blockchain, the move would be met with praise especially by financial institutions that have had to increase their investments while trying to find the best solutions to make their back office processes easier and more cost-effective.
Blockchain, while largely known as the tool for cryptocurrencies, actually provides a shared ledger of transactions that can be maintained over a network across multiple devices, rather than being restricted to the hard disks of individual machines in a workspace. Due to the ease of use and functionality that blockchain offers, more and more companies are now open to relying on it to manage their day-to-day processes that involve sharing important information with multiple employees, institutions, and regions all at once.
Having a blockchain interface – or a distributed ledger technology – is sought after by larger companies that want to maintain and update their data optimally.
London Is Not Far Behind
Back in July 2017 while France had been planning to establish Paris’ image as a business-friendly location, it was reported that the London Stock Exchange Group had joined forces with IBM in order to build a blockchain-based platform that aimed to help in digitally issuing private shares of SMEs in Italy.
At that time, the platform was still being tested by Borsa Italiana, the Italian exchange operator for the LSEG. It had aimed to make exchanging and maintaining shareholder information of unlisted businesses nothing short of a breeze. However, the findings have not been made public yet. It might just be a matter of time before the information is shared in light of the recent developments from Paris.