Blockchain to be used on Myanmar stock exchange
Wed 2 Nov 2016
Daiwa Securities Group, a major Japanese financial services company, has announced that it intends to implement blockchain technology for trading on the Yangon Stock Exchange in Myanmar (formerly Burma).
Daiwa has been testing blockchain technology at the Yangon exchange for months, from June to September, and hopes to complete formal implementation for all Daiwa stock trades on the Yangon exchange within two years. The company is currently negotiating with government officials in Myanmar to implement the system.
Blockchain technology may be particularly suited for implementation in countries like Myanmar, where problems with developing infrastructure can lead to frequent power outages and loss of phone services. Traditionally, stock trade information is stored in servers at the exchange, but power loss halts all operations as historical information is necessary to make trades.
Using blockchain, brokerages can continue some of their operations, including accessing historical information, past transactions, and outstanding balances for their clients even during interruptions in power. Since the blockchain ledger will be available outside of the affected location, transaction records will still be able to be shared securely at several different locations simultaneously.
Naturally, new transactions could not be conducted without central access to the ledger. However, the Yangon Stock Exchange only conducts trades twice per day, matching buy and sell orders at 11 am and 1 pm. Other exchanges match orders constantly during the day, making continuous connection to servers more crucial. Because there is limited time to conduct actual trades at Yangon, Daiwa believes that the technology can be implemented with few technical issues.
The first test of blockchain technology in Myanmar occurred this June, when Japanese software company Infoteria announced that it successfully implemented blockchain to monitor the microfinance transactions of BC Capital, Myanmar’s largest microfinance company.
This occurred just three months after the Yangon Stock Exchange conducted its first trade. The exchange opened in March of this year, just as the country’s leadership was handed over to the National League for Democracy (NLD).
One of the benefits of implementing a blockchain system for financial transactions in a brand-new exchange is that new brokerages can enter the market and begin trading simply by joining the system.
Daiwa has been a part of the stock market in Myanmar since it was first established in 1996 as the over-the-counter Myanmar Securities Exchange Center. The new Yangon Stock Exchange was established as a joint venture between the state-owned Myanmar Economic Bank, the Japan Exchange Group, and Daiwa Institute of Research.