Capital markets News

BNP Paribas Securities creating DLT apps for ASX, HKEX with Digital Asset

bnp paribas

Today BNP Paribas Securities Services (BPSS) said it’s working with Digital Asset (DA) to develop apps for the distributed ledger (DLT) platforms being developed by the Australian Securities Exchange (ASX) and Hong Kong Exchange (HKEX). These will use DA’s smart contract language DAML, known for its workflow prowess and compatibility with several blockchain ledgers and databases. The first solutions will be delivered in 2021.

The apps or dApps will be for real-time trade and settlement, and the bank says they will enable clients that haven’t integrated with the DLT platforms to nonetheless benefit from the real-time workflows offered by DAML.

“We believe that DAML has the potential to emerge as a new standard for international capital markets,” said Luc Renard of BPSS APAC. “As a platform-agnostic, smart contract language, it can be used by almost any trading and settlement platform an exchange might select.”

The emphasis is on real-time and the first solution will be a smart election service for corporate actions. BPSS was the custodian for $11.8 trillion in assets at the end of 2019 and had $2.8 trillion in assets under administration. By using the app, all parties in the corporate action chain will receive information simultaneously. For example, if a purchase offer is made or for dividend reinvestment.

“Our work with BNP Paribas has the potential to change the way organisations design their post-trade and custodial functions – increasing the scope for innovation and reducing risk,” said Jon Rout, Business Development Director APAC for Digital Asset.

Australian share registrars are worried about precisely this point. For example, one of their responsibilities is tracking dividend reinvestment plans. With DLT there are more efficient and transparent ways of doing this. Some of the Australian registrars have alleged anti-competitive practices by the ASX.

Digital Asset is known for its work on the ASX CHESS post-trade platform, but the HKEX work has been a little lower key. It’s been almost two years since Digital Asset announced a deal with HKEX to work on its post trade processing. HKEX’s Stock Connect acts as a gateway for international investors to participate in Shanghai and Shenzhen’s stock exchanges. Unlike the typical two-day settlement window, in China it’s four hours.

Yesterday, Digital Asset announced another deal with China’s Blockchain-enabled Service Network (BSN), where DAML will enable interoperability between blockchains using different ledgers and ledger technologies.