A Double-Edged Solution for Capital Market Success
Technology With a mandate to create efficiency in capital markets, financial technology company Finhaven is building a full-stack, global capital market platform.
With a mandate to create efficiency in capital markets, Canadian financial technology company Finhaven is building a full-stack, global capital market platform that provides an end-to-end solution for issuing, investing, and recording of digital securities.
"The current capital market infrastructure is built around paper securities, leaving the capital market system vulnerable to multilayered risks," explains CEO DH Kim. "We also have to rely on market intermediaries for transactions, which means higher costs. But with technological improvements, we can build a much better infrastructure."
A traditional, but innovative fix
"Capital markets' success comes from liquidity and liquidity isn't just provided by a technological solution, but also via information sharing."
– DH Kim, Finhaven CEO
A more modern solution to market risks is available in the form of security tokens. "Essentially, security tokens are digital securities that are backed by traditional financial products and issued via smart contracts," Kim explains. "They establish a new – and attractive – set of characteristics for the product."
Because they're issued by smart contracts, security tokens can self-execute and carry out actions, allowing for more efficient management. "It allows security issuers to save substantial costs and helps investors have greater autonomy," says Kim. "There's also a direct, transparent record of ownership."
Improving securities exchanges
The limitations of blockchain in capital markets have provided a real opportunity for the company to create innovation for market efficiency. "Blockchain technology is still very young and the automation is still very vertical, so you can't have complicated regulatory components within these smart contracts," Kim notes. "You have to be able to accommodate the complexity of capital market regulations, but the current status of smart contracts simply isn't at that level." Finhaven's high-capacity cryptographic ledger provides a solution for these limitations through identity authentication, authorization and security, enabling capital market participants to save time and money.
Through programmable securities, the platform provides companies with access to new markets, asset liquidity, programmable assets, secure and immutable data, and auditable trails of ownership. In effect, it becomes much easier, more cost-effective and secure for businesses to raise global capital.
"Capital markets' success comes from liquidity," says Kim, "and liquidity isn't just provided by a technological solution, but also via information sharing." That's why the company recently launched the Finhaven Investors Network (FIN), a decentralized social hub of investors with the purpose of sharing authentic information.
"We're opening the doors for any individual to issue their independent research on our platform, and price it however they want," Kim explains. "Liquidity isn't something you can create mechanically. This social network is the foundation of providing liquidity to capital markets." With new technologies, the company wants to make the investment experience a much more interactive process.