Digital assets firm founded by SGX, Temasek to roll out funds ecosystem as early as June

SINGAPORE – A digital assets firm founded by Singapore’s investment company Temasek and bourse operator Singapore Exchange (SGX) could roll out to businesses its funds settlement infrastructure built on blockchain technology as soon as the second half of June.

Digital markets infrastructure operator Marketnode said it took about 12 months, instead of the typical three to five years, to build a commercially viable funds settlement platform called Fundnode.

In its pilot phase, the firm tested the platform for funds transaction management, processing and record-keeping.

At the upcoming launch, Fundnode will be operationally ready and have a network of partners, which then creates an ecosystem.

Marketnode president Rehan Ahmed told The Straits Times in an interview: “We don’t just want to take the machine live and then see that there are no transactions happening. We want to be in a position where we announce to the market that we’re not just live, we’re also doing a certain amount of flow (transactions) on the platform on a daily basis.”

Fundnode’s network comprises fund managers, which create the products; and distributors, such as wealth managers, private banks and financial advisory firms, which purchase or sell those funds on behalf of clients.

“We are quite close to making our funds platform live over the next month or so. This is actually a true niche national market infrastructure,” noted Mr Ahmed.

He said he hopes to announce later in 2024 more strategic partners – financial institutions and infrastructure players – for the network.

The commercial launch of Fundnode comes almost two years since Marketnode first announced plans to set up a funds settlement platform in association with the Singapore Funds Industry Group.

Fundnode is one of two products developed by Marketnode, which was founded in 2021. The other product is Gateway, a one-stop issuance, tokenisation and asset-servicing platform.

“We think that there is enough white space in capital markets and asset management, especially given that Singapore in Asia is a big wealth hub and more players are playing,” Mr Ahmed said.

For Gateway, the firm is focused on taking programmable on-ledger assets live either in the last quarter of 2024 or the first quarter of 2025, he said.

The first native digital asset that Marketnode hopes to roll out on Gateway will be structured notes.

Tokenised credit products, such as bonds and loans, would hopefully be next to be offered in the first quarter of 2025.

When asked about the key challenge of the business, Mr Ahmed said the hard part is building a network in the funds ecosystem.

“There’s also a lot of demand for Asian capital markets products globally from investors sitting in Europe, Britain and the United States. So actually, for us, building via partnerships in a global distribution channel is the biggest challenge and the biggest opportunity as well,” he said.

The team is looking closely at distribution partners to build a network that stretches from the East to the West.

“And this is where our Series A partnerships become quite important,” Mr Ahmed said.

The firm recently announced the successful first close of its Series A investment round led by HSBC and Temasek, but did not disclose the amount raised. Series A is the next round of funding after seed funding.

The investment will help Marketnode scale up infrastructure across key asset classes, such as digital fixed-income and structured products, launch Fundnode, and roll out other tokenised asset offerings.

Without giving details, Mr Ahmed said the firm is looking at applying for a Singapore licence and that it would depend on the kinds of activities the company does.

The firm now has 35 employees based in Singapore. It is looking to expand its team to 40 to 45.

For a while, Marketnode’s focus was digital bonds.

Marketnode and HSBC have been co-developing a digital market infrastructure covering credit, funds and structured products since 2020.

Both entities are participants in the Monetary Authority of Singapore’s Project Guardian initiative, which explores the use of blockchain in institutional digital assets trading.

In August 2020, Marketnode’s platform was used by SGX, HSBC Singapore and Temasek to issue Asia’s first publicly syndicated digital bond for Olam International.

In April 2021, HSBC Singapore and Marketnode completed a digital bond issuance on the latter’s platform. This was done alongside a $1 billion perpetual securities issue by Singtel Group Treasury. The issuance was part of SGX’s pilot to assess the use of digital assets in streamlining processes in the Asian bond market.

In June 2022, SGX said the central depository made available to market participants a blockchain-enabled bond issuance platform by Marketnode, and OCBC used it for a US$100 million (S$135 million) commercial paper issuance. The solution cuts settlement time from five days to two.