Singapore's MAS, SGX develop blockchain tech for tokenised assets settlement


  • Business
  • Sunday, 11 Nov 2018

The EY report comes following a cryptocurrency investing frenzy, during which startups raised hundreds of millions of dollars online, with often little more than a business idea and a handful of employees. The 2017 ICO boom paralleled a spike in the price of bitcoin, which peaked in December at almost $20,000. Since then, the market has fallen by more than 70 percent.

KUALA LUMPUR: The usage of tokenised digital currencies and securities assets has been given a boost in Singapore with the development of delivery versus payment (DvP) capabilities for the settlement.

According to a statement issued by Singapore Exchange (SGX) on Sunday, the regulator and the Monetary Authority of Singapore (MAS) have successfully developed the DvP capabilities.

The DvP capabilities will enable the final settlement of tokenised digital currencies and securities assets on different blockchain platforms.

“This will help simplify post-trade processes and further shorten settlement cycles,” the statement said.

DvPis a settlement procedure where securities and monies are simultaneously exchanged to ensure that delivery of securities occurs only if the corresponding payment is made.

The DvP prototypes were developed with technology partners Anquan, Deloitte and Nasdaq.

“The ability to perform these activities simultaneously improves operational efficiency and reduces settlement risks,” SGX said.

“The collaboration also demonstrated that DvP settlement finality, interledger interoperability and investor protection can be achieved through specific solutions designed and built on blockchain technology. 

“Following its conclusion, MAS and SGX have jointly published an industry report,  which provides a comprehensive view of automating DvP settlement processes with Smart Contracts,” it said. 

Smart Contracts are self-executing contracts where contractual terms or business logics are codified as software code to be executed upon the fulfilment of pre-defined conditions.

According to SGX, the report also identifies key technology and operational considerations to ensure resilient operations, and defines a market framework that governs post-trade settlement processes such as arbitration.

MAS chief fintech officer Sopnendu Mohanty said: “Blockchain technology and asset tokenisation are fuelling a new wave of innovation globally. 

“This project has demonstrated the value of blockchain technology and the benefits it can bring to the financial industry in the short to medium term. 

“The concept of asset tokenisation, as well as other learnings gleaned from this project, can potentially be applied to a broad spectrum of the economy, creating a whole new world of opportunities.”

SGX head of technology at SGX and project chair Tinku Gupta said the stock exchange was delighted to drive this important industry effort to accelerate innovation in the marketplace. 

“Based on the unique methodology SGX developed to enable real-world interoperability of platforms, as well as the simultaneous exchange of digital tokens and securities, we have applied for our first-ever technology patent,” she said.
 

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