South Korea-based Shinhan Bank is slated to offer affordable peer-to-peer (P2P) stock lending via a blockchain platform. The platform is being jointly developed by the banking group’s brokerage arm Shinhan Financial Investment in partnership with domestic financial services provider Directional, according to a report by CoinDesk.
According to local media outlets, the service — slated to begin operating later this year — would allow traders to lend and borrow stocks directly with other traders. Eliminating intermediaries could lower overall expenses incurred by traders, a common pain point in securities lending that heightens the barrier to entry for all but large, institutional investors.
Fees can instead be charged by securities lenders, making the process more lucrative, while short-sellers would be able to borrow stock from counterparties without incurring expensive intermediary costs.
Joint development on the P2P stock lending platform has been approved by the Financial Service Commission (FSC) for its regulatory sandbox.
South Korea’s sandbox program was announced by the FSC in April. Only a month a later, Directional was approved for operation under the sandbox for its financial technology (fintech) solutions.
Sandboxes have been established by several other countries, including the United Kingdom, Australia, Canada, Hong Kong, and Singapore, to spur innovation in fintech.
Shinhan Hits the Gas on Blockchain Development
Coindesk characterized Shinhan Bank as “aggressive” in its development of blockchain technology. In 2017, the banking group employed distributed ledger technology for gold bar verification.
In May 2019, Shinhan revealed that it would use DLT to verify loans, eliminating paperwork, offering greater digital convenience to customers, and eliminating time-consuming manual processes.
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