Bank of Canada, TMX to test blockchain for securities settlement

TORONTO (Reuters) - Canada’s central bank, Toronto Stock Exchange operator TMX Group Ltd and Payments Canada said on Tuesday they will collaborate to test the use of blockchain technology for automating the securities settlement process.

The three organizations said they would develop an experimental integrated securities and payment settlement platform using a distributed ledger, the same technology that underpins cryptocurrencies like bitcoin.

It is the third phase of an effort known as “Project Jasper” that the central bank launched last year. Earlier phases focused on experimenting with clearing and settling high-value interbank payments using distributed ledgers.

The new phase will test the technology’s ability to settle multiple assets on the same ledger.

“A better settlement process would not only reduce the cost of securities transactions, but also support financial system resiliency, especially in periods of stress, through faster settlement times and reduced settlement risk,” the central bank’s senior deputy governor, Carolyn Wilkins, said in a statement.

Reporting by Solarina Ho in Toronto; Editing by Jim Finkle and Jonathan Oatis