In order gain efficiency and stay competitive in the digital economy, businesses need programmable stocks and bonds.

Smart Securities

Smart securities combine book entries with rules stated in the terms and conditions using smart contracts. Data and rules are synchronized. Investors can verify entries related to their ownership without loss of privacy. Regulatory requirements such as accredited investor check, anti-money laundering rules, registration requirements can be programmed into the securities. This reduces the need for expensive reconciliation and audits and speeds up the transaction, settlement and management of the lifecycle of securities.

Traditional Securities

Uncertificated or dematerialized securities’ amount, value and ownership information are maintained as data (book entries) in private ledgers. The rules for management of these book entries are maintained separately in software and documents which include the terms and conditions of the securities. Anyone having access to the private ledgers can modify this information. Maintaining accuracy of this information requires expensive audits and reconciliation at regular intervals. The process is expensive, prone to errors and frequently subject to conflicts of interest.

Smart Securities are Programmable with Smart Contracts

Smart contracts create opportunities to achieve higher efficiency and throughput in transaction processing due to the following characteristics:

Immutability: Smart contracts are immutable. Transactions executed through smart contracts are final and irreversible. This eliminates risk of fraud and manipulation.

Transparency: Smart contracts store data on blockchain. Since blockchain data is immutable, it can be maintained as a public ledger without fear of manipulation. Blockchain allows authorized third-parties to audit and verify transactions without compromising the privacy of the transacting parties.

Security: Smart contracts allow transacting parties to execute transactions without sharing confidential information. This allows two or more parties to enter a transaction without requiring a trusted relationship and without an intermediary.

Cost Savings: By eliminating multiple intermediaries and by synchronizing data, rules and ownership information, smart contracts remove duplicative processes, which results in cost savings

Speed of Transactions: By performing automated calculations, rule-based validations and by eliminating intermediaries, smart contracts increase speed of transactions by orders of magnitude.