Singapore Leads the Way As Stock Exchanges in Asia Pacific Are Embracing DLT

Singapore Leads the Way As Stock Exchanges in Asia Pacific Are Embracing DLT

by November 23, 2020
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Across Asia Pacific, stock exchanges have accelerated the adoption of smart contract technology and DLT to optimize market workflows.

The Australian Securities Exchange (ASX) is looking to replace its Clearing House Electronic SubRegister System, or CHESS, with new DLT and smart contract-based infrastructure, an upgrade  that is expected to bring a host of benefits, such as more control for issuers and investors, cost efficiency and enhanced security.

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In Hong Kong, local bourse operator HKEX is considering applying smart contract technology to its Stock Connect program to simplify the transaction process of stock trading between the special administrative region (SAR) and mainland China.

And in Singapore, the Monetary Authority of Singapore (MAS) began exploring the use of blockchain and DLT as an alternative to existing clearing and settlement systems in 2016.

SGX issues S$400 million digital bond

Across the region, the Singapore Exchange (SGX) is paving the way forward in the region’s bond market, embracing the use of smart contracts and distributed ledger technology (DLT) to streamline processes, improve efficiencies and reduce associated costs.

In September, SGX, one of the largest equities and derivatives in Asia, completed its first digital bond issuance on its digital asset issuance, depository and servicing platform, an Asia first for a syndicated public corporate bond, and another milestone in SGX’s use of digital asset technology.

Lee Beng Hong, senior managing director and head of fixed income, currencies and commodities at SGX, said the exchange was now moving to “fully digitalize the end-to-end corporate bond issuance” and build a full-stack digital infrastructure focused on Asia fixed income.

The pilot was conducted in partnership with HSBC Singapore and Temasek, a collaboration initially announced in November 2019.

In a blog post, HSBC said that several of its teams helped develop the process for the issuance of the digital bonds, or tokenized securities, on SGX’s DLT-enabled platform. The digitalized bond issuance process achieved a reduction in total settlement time from five days down to just two, enabled automation of issuance flows and coupons, and redemption payments, and overall, significantly improved processes.

Digital Asset Issuance Platform, Illustration via SGX.com

Digital Asset Issuance Platform, Illustration via SGX.com

A leader in blockchain tech and crypto assets

Singapore is rapidly emerging as a global leader in blockchain technology and crypto assets. The 2019 Singapore Blockchain Landscape Map showed a subset of over 500 companies and entities with blockchain as their primary business or significantly engaging in distributed technology.

DBS, the country’s largest bank, is currently working on a digital currency exchange. A version of the web page of the DBS Digital Exchange, which was briefly made public in October before being taken down, said that the exchange will list four top cryptocurrencies, bitcoin, ether, ripple and bitcoin cash, against multiple fiat currencies including SGD, USD, HKD and JPY.

The exchange will also allow small and medium-sized enterprises (SMEs) and corporates to raise capital via security tokens, allowing them to digitalize their securities and assets.

The DBS Digital Exchange will not hold any of the digital asset. Instead, they will be kept with the banking arm of DBS via an institutional-grade custody solution called DBS Digital Custody.

Only financial institutions and professional market makers will be permitted as members. Individual investors will only be able to access the platform via a member, for example, DBS Private Bank.

A spokesperson for the bank said in late October that DBS was still in the process of seeking regulatory approval.

 

Featured image credit: Screengrab from Youtube

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