The Japan Exchange Group-led blockchain consortium, a working group aiming to develop and deploy blockchain proof-of-concept platforms for capital markets, plans on releasing its first user app in April this year.
The Japan Exchange Group (JPX) operates the Tokyo Stock Exchange and the Osaka Securities Exchanges following a merger of the two companies in 2013. Together, the Japan Exchange group is the biggest stock exchange in Japan and among the top 5 exchanges in the world.
The group began researching blockchain for capital market infrastructure with an internal group in late 2015. After concluding that the innovation could bring substantial change to the sector the Japan Exchange group announced a partnership with IBM Japan to test clearing, settlement and other financial operations with the technology. Testing began the following month in March 2016.
By the end of the year, the JPX spearheaded an effort to form a blockchain consortium comprising of Japanese financial institutions to test the prototype developed with IBM. The blockchain proof-of-concept (PoC) used technology from the Hyperledger platform, the open-source cross-industry blockchain collaborative led by the Linux Foundation.
At the time, the JPX stated:
We will seek participation from a wide range of Japanese financial institutions in order to gather broad industrial expertise. Members of the consortium will conduct PoC testing and discuss the applicability of DLT (Distributed ledger technology) to the capital market infrastructure, both from technical and operational perspectives.
In a recent announcement, the JPX has confirmed that PoC testing commenced at the end of January 2017. Notably, 23 financial institutions have joined the ranks of the consortium.
They include the likes of Mizuho and Mitsubishi UFJ (MUFG), two of Japan’s three so-called ‘megabanks.’ A number of other securities exchange companies, depositories and banks also figure as consortium members.
Pointedly, the likes of the Bank of Japan and the Financial Services Agency (FSA), Japan’s central bank and financial regulator respectively, are also members of the consortium, raising the possibility of a sweeping transformational change with blockchain-based trading in Japan, if implemented.
While details of the PoC testing remain scarce, the JPX hinted at real-world implementation, stating:
Furthermore, in terms of actual testing environment, we plan to release the first user application for this series in April.
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