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Scotex Hints at Developing a Blockchain-based Regulated Equity Market

Reading Time: 2 minutes by on November 1, 2016 Finance, News, Tech
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Entire nations are starting to shift their attention toward blockchain technology as of late. Scotland, a region relatively quiet on the Bitcoin and blockchain front, may soon see the launch of a new stock exchange. Scotex, the country’s stock exchange, is looking to raise £15 million to create a blockchain-based, regulated equity market.

Similar to how NASDAQ is experimenting with distributed ledger technology, Scotex aims to do the very same. The company unveiled their plans to launch a new, regulated equity market in 2018. Moreover, they want to build this new platform on top of blockchain technology, assuming they can raise enough money to bring that plan to fruition.

Scotland is a somewhat unique country, even though it is still part of the United Kingdom. For now, that is, as First Minister Nicola Sturgeon had hinted at calling an independence vote in the past. Ever since the United Kingdom separated from the European Union through the Brexit vote, the relationship between Scotland and England has been rather uneasy.

If a separation were to happen, Scotex would become the nation’s first independent stock exchange since 1973. While an independence call may not be on the agenda just yet, the financial institution is looking for ways to keep innovating in the meantime. Blockchain technology is of particular interest to the company and they are willing to build an entirely new platform on top of it.

The arguments for this decision have been heard many times before. Trades would be settled instantly, and there would no longer be a need for clearinghouses. Scotex even mentioned how both brokers and investors will get their funds within a quarter of an hour after executing their trade on the blockchain-based platform.

The Scotex platform made media headlines on July 1, 2016. At that time, it became apparent the company wanted to be an innovative stock exchange, and they even referred to distributed ledger technology at that time. However, none of those plans were formalized at that time, nor was there any indication of raising funds to develop the platform itself.

Building this new exchange requires Scotex to meet capital requirements. At the same time, the company also needs to cover other costs, including the authorization of its distributed ledger as a payment system. This seems to indicate the company will be using a proprietary blockchain for this venture, albeit that is not entirely surprising.

While we know the total cost of this platform is around £15 million, further information remains scarce for now. There is no official information regarding the fundraising process itself, nor is there a timetable for the development of this equity market platform.

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