How Capital Markets are Currently Undergoing a Digital Overhaul

How Capital Markets are Currently Undergoing a Digital Overhaul

by August 10, 2021

Advances in technologies, including distributed ledger technology (DLT), artificial intelligence/machine learning (AI/ML), big data analytics and cloud computing are transforming the lifecycle of securities, increasing efficiency and automation as well as bringing better transparency.

Over the past year, incumbent banks and fintech providers have ramped up efforts to modernize capital markets, delivering new and modern solutions that leverage digital platforms, blockchain technology, tokenization and more to make capital markets access more time and cost efficient.

Just this past June, Singapore’s leading bank DBS Bank launched Asia’s first fully digital and automated fixed income execution platform, allowing issuers to directly connect with investors at their sole discretion.

DBS’s Fixed Income Execution (FIX) Marketplace lets companies and other organizations issue their own bonds into the marketplace, while maintaining the ability to execute bond transactions via dealers. The platform fully digitizes and automates documentation and primary trade confirmation generation, and comes with tools and data for both issuers and investors.

For the next phase of development, issuers will also be able to issue self-led digital bonds which could then be listed on the DBS Digital Exchange (DDEx), the bank’s digital asset ecosystem.

Digital transformation of capital markets

The FIX Marketplace and DDEx are part of DBS Bank’s digitalization push to help modernize Asia’s capital markets.

Launched in December 2020, DDEx leverages blockchain technology and tokenization to allow clients to raise funds from the private market in an efficient, secure and transparent manner. The platform also offers institutional investors trading services between fiat currencies including SGD, USD and HKD, and established cryptocurrencies like bitcoin, ether and XRP, as well as digital asset custody services.

DBS Digital Exchange (DDEx) infographic, Source: DBS Bank

DBS Digital Exchange (DDEx) infographic, Source: DBS Bank

DBS Bank is just one of the many banks around the world that are gearing up for a future in which they believe digital assets and securities will be the norm. And this past year, many strides have been made in this regard.

In April 2021, the European Investment Bank (EIB) launched a digital bond issuance on a blockchain platform, deploying DLT for the registration and settlement of digital bonds in collaboration with Goldman Sachs, Santander and Societe Generale.

Separately, Societe General issued that same month the first structured product as a security token directly registered on the Tezos public blockchain.

Societe General’s digital assets efforts are led by Societe Generale – Forge, a regulated subsidiary of the group which aims to start offering crypto assets structuring, issuing, exchange and custody services to professional clients by 2022.

In Switzerland, SIX Digital Exchange, a subsidiary of stock market operator SIX, is building what it claims to be the first market infrastructure in the world to offer a fully integrated end-to-end trading, settlement and custody service for digital assets.

The service aims to provide a safe environment for issuing and trading digital assets, and enable the tokenization of existing securities and non-bankable assets like art pieces and real estate.

FX Matchmaking for Indonesia

In the foreign exchange (FX) market, financial markets data and infrastructure provider Refinitiv launched its Matching platform in Indonesia just last month, becoming the country’s first interbank electronic marketplace for the trading of rupiah. The platform offers real-time credit screening, price discovery, liquidity and execution for FX traders.

Bank Indonesia (BI) welcomed the move, noting that the launch of the advanced FX trading system is in line with the central bank’s Blueprint for Money Market Development 2025, a national plan aimed at developing a more active money market in Indonesia part of a larger effort to deepen the country’s capital markets.


Featured image: Unsplash