Santiago bourse launches blockchain-backed securities trading

Chile's Santiago stock exchange has launched the world's first blockchain system for securities trading in partnership with IBM.

The company reached the agreement with the Santiago exchange in May last year and has been testing the technology with the aim of helping Latin America's third-largest bourse increase the size of the short-selling market and eventually scale the system to other countries.

"This is a strategic pillar of the Santiago stock market. This initiative positions us as a reference point for the region," said José Antonio Martínez, general manager of the Santiago stock exchange.

The solution developed by IBM is based on the open source Linux Foundation's Hyperledger Fabric, with the intention of ensuring the solution is available to support multiple parties across the financial industry ecosystem.

According to Santiago exchange's CIO Andrés Araya, short selling currently represents 0.7% of the total transaction volume, which is US$200mn daily. The bourse is targeting closer to 40%, which is the case in the stock markets of some developed nations.

Blockchain works as an immutable ledger that records transactions. The new solution is designed to help reduce errors, possible fraud and processing time for each transaction, while also improving transaction management and lowering costs.