Capital markets News

Singapore Exchange plans stock settlement blockchain

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Today the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) announced they would work together on a settlement system for tokenized assets. Delivery versus Payment (DvP) involves the simultaneous exchange and settlement of a transaction. So the plan is to tokenize both currencies and securities assets to make this happen.

The initiative appointed three companies as technology partners: Anquan, Deloitte, and Nasdaq. MAS is both Singapore’s Central Bank and financial regulatory authority. Previously MAS ran Project Ubin which involved a Central Bank Digital Currency (CBDC) experiment using three different blockchain technologies.

The result was three separate sets of code using R3’s Corda, Hyperledger Fabric, and JP Morgan’s Quorum. MAS open sourced the code and the DvP project will also use this software.

For the latest DvP initiative, the SGX statement states there will be “capabilities for settlement of tokenised assets across different blockchain platforms”. In November they will publish a report that examines the potential for automating the settlement process with Smart Contracts and identify key design considerations.

Sopnendu Mohanty, Chief FinTech Officer of MAS, said, “Blockchain technology is radically transforming how financial transactions are performed today, and the ability to transact seamlessly across blockchains will open up a world of new business opportunities.”

Tinku Gupta, Head of Technology at SGX, and Project Chair said, “This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers’ and sellers’ risk in the DvP process. This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem.”

The tie up with with Nasdaq isn’t a new one. SGX’s Reach trading platform is based on Nasdaq software, and last year the two exchanges announced an agreement to enable companies to jointly list on both exchanges. SGX also has a prior relationship with Anquan on a BondChain project. Anquan’s technology involves sharding which breaks down a blockchain into smaller pieces enabling greater speed and scalability. The company shares some team members with the Zilliqa public blockchain.

There are several stock market tokenization projects around the world. Back in May, the Canadian TMX announced Project Jasper had completed a similar proof of concept. The Australian Stock Exchange will start testing its new blockchain CHESS system in January.