Central Bank Of Singapore, SGX Successfully Leverage Blockchain For Tokenized Assets Settlement

Blockchain, News | November 12, 2018 By:

The Monetary Authority of Singapore (MAS), the central bank of the country, and the Singapore Exchange (SGX) have successfully tested different blockchain platforms for tokenized assets settlement.

The trial, which started in August of this year after MAS and SGX partnered with Anquan, Deloitte and Nasdaq, aims to simplify post-trade processes and further shorten settlement cycles. The parties have developed a blockchain solution for Delivery versus Payment (DvP) capabilities, a common form of settlement for securities. The DvP process involves the simultaneous delivery of all documents necessary to give effect to a transfer of securities in exchange for the receipt of the stipulated payment amount.

The trial reportedly demonstrated that financial institutions and corporate investors are able to carry out the simultaneous exchange and final settlement of tokenized digital currencies and securities assets on different blockchain platforms. The parties believe that the ability to perform these activities simultaneously improves operational efficiency and reduces settlement risks. The trial also demonstrated that smart contracts for DvP could enable the consistent and coherent implementation of rights and obligations that will increase investor confidence and reduce compliance costs in the market.

Sopnendu Mohanty, Chief FinTech Officer of MAS, said that blockchain technology and asset tokenization 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,” Mohanty said. “The concept of asset tokenization, 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.”

The DvP-on-DLT project is an extension of Project Ubin, which started in November 2016 as an industry collaboration to explore the use of Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities. Phase 2 of Project Ubin was completed in 2017 and successfully produced three software prototypes that achieved decentralized netting of payments, in a manner that preserved transactional privacy.

“We are delighted to drive this important industry effort to accelerate innovation in the marketplace,” said Tinku Gupta, Head of Technology at SGX and Project Chair. “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.”