TOKYO -- Daiwa Securities Group is set to adopt blockchain technology in payments for stock trading in Myanmar, hoping to put the technology to practical use within two years.
Blockchain, the shared record-keeping protocol central to virtual currencies, is easy to use even in countries with poor infrastructure. It also allows brokerages easier entry to the market. The Japanese securities company will negotiate with the Myanmar government to introduce the system.
Daiwa Institute of Research Holdings and other units of Daiwa tested the system from June to September using general-purpose servers that are available in Myanmar. On the assumption of using blockchain to connect the Yangon Stock Exchange and local brokerages, the test was conducted to gauge how the system would work in the country, which is often hit by power outages and phone lines going dead.
Blockchain technology shares transaction records with multiple computers. Stock trading is typically saved in servers at bourses, but records cannot be referenced when communications infrastructure fails.
Using blockchain systems, brokerages can continue a minimum of operations, such as checking past transaction records and outstanding balances even when failures occur, although new transactions cannot be checked.
Stock trading began in Myanmar in March. There are currently five brokerages, but that number is expected to increase. With blockchain systems, brokerages can enter the market simply by participating in the system.
No stock exchange has introduced blockchain technology in trading of listed stocks, according to a Daiwa Securities Group representative.
Blockchain is unfit for high-speed trading, but the Yangon Stock Exchange only matches buy and sell orders twice a day, at 11 a.m. and 1 p.m., unlike the continuous matching that happens at most bourses. Therefore, Daiwa expects no technical issues to bar introduction of the system.