Italy’s only stock exchange Borsa Italiana, part of London Stock Exchange Group, and IBM are building a blockchain solution to digitise the issuance of securities for unlisted small and medium enterprises (SMEs) in Europe.

The aim is to simplify the tracking and management of shareholding information, and create a distributed shared registry containing a record of all shareholder transactions. The firms are currently undergoing an initial test phase with a small group of partners and clients.

Raffaele Jerusalmi, CEO, Borsa Italiana, says it is “taking the lead in transforming the way European SMEs can manage their shareholder data and at the same time expand credit access”.

The solution will replace paper trading certificates, and so various parties – including issuers, regulators and investors – will have “increased insight into company information”.

According to the companies, private SMEs lack access to public stock exchange networks or formalised credit structures. With this solution, SMEs in Europe can “better access credit and link into a broader and more mature investor ecosystem, enabling them to set up new trading networks and obtain funding”.

The solution is built on Hyperledger Fabric version 1.0, a blockchain framework and one of the Hyperledger projects hosted by the Linux Foundation.