The Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS) are exploring ways to trade assets efficiently and safely using blockchain technology.
They announced yesterday that they will collaborate with tech firm Anquan, accounting giant Deloitte and Nasdaq to develop Delivery versus Payment (DvP) capabilities for settlement of tokenised assets across different blockchain platforms.
DvP is a settlement procedure in which securities and payments are simultaneously exchanged to ensure that the securities are delivered if and only if the corresponding payment is made.
Tokenised assets are those whose ownership rights have been converted to digital tokens that can be bought and sold.
DvP capabilities for tokenised digital currencies and securities assets would improve operational efficiency and reduce settlement risks for financial institutions and corporate investors by allowing them to carry out simultaneous exchange and final settlement for such assets, the SGX and MAS said in their joint statement.
Technology partners Anquan, Deloitte and Nasdaq will leverage open-source software developed and made publicly available in Phase 2 of Project Ubin, an industry collaboration started in November 2016 to explore the use of distributed ledger technology to clear and settle payments and securities.
At the end of the project, they will produce a report by November this year that will examine the potential of automating DvP settlement processes with smart contracts and identify key design considerations to ensure resilient operations and enhanced protection for investors.
"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," said Ms Tinku Gupta, the head of technology at SGX and the project's chair.
"This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem."
MAS chief fintech officer Sopnendu Mohanty added: "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.
"The involvement of three prominent technology partners highlights the commercial interest in making this a reality.
"We expect to see further growth in this space as fintechs leverage the strong pool of talent and expertise in Singapore to develop innovative blockchain applications and benefit from the new opportunities created."
