SGX and MAS Jointly Developed Settlement Platform

DvP Platform Developed

In an effort to bring new levels of efficiency to finance, the Monetary Authority of Singapore (MAS), and the Singapore Exchange (SGX), have turned to blockchain.  In a recent report released by the duo, they describe the process in which through the utilization of smart-contracts, they are able to shorten settlement periods on security transactions.  This is known as a Delivery versus Payment (DvP) platform.

Typically, when a transfer of ownership occurs for an asset represented by a security, this trade is followed by a settlement period.  This period typically ranges from 1-2 business days.  The MAS and SGX have shown that through the use of their developed platform, they are able to simultaneously complete the trade and settlement process for digital securities – essentially removing the 1-2 day wait typically seen.

Furthermore, they were able to demonstrate interoperability between various blockchain.  This flexibility, combined with the increase in efficiency and security offered through the process, is a perfect example of how blockchain can be implemented into finance.

The report was made available on November 11, 2018.  This comes roughly 2 months after the announcement of their collaboration on this project was made.

Monetary Authority of Singapore (MAS)

The MAS is the central bank of Singapore.  Their role is to strive for economic growth within the country.  They achieve this through oversight of all financial institutions operations within their borders.

Commenting on the platform developed with the SGX was Chief Fintech Officer of the MAS, Sopnendu Mohanty.  He stated, “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.”

Singapore Exchange (SGX)

The SGX came to fruition in 1999 when the Stock Exchange of Singapore, Securities Clearing and Computer Services, and the Singapore International Monetary Exchange combined into one entity.  In the time since this merger, the SGX has grown to offer services from trading, settlement, custody solutions, and more for the thousands of assets that they support.

Speaking on the newly developed DvP platform was the SGX Head of Technology, Tinku Gupta.  She stated, “We are 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.”

Outside Help

While this DvP platform is the result of the efforts of both the MAS and the SGX, they were not without help during the development process.  In their time creating this platform, the duo was assisted by three entities; These were Nasdaq, Anquan, and Deloitte.  Each of these companies lent their expertise to the project, as it has the potential to aid in a future of finance that is not hindered by borders.

Nasdaq Senior Vice President, Magnus Haglind spoke about their collaboration.  He commented, “In collaborating with SGX and MAS on this unique ecosystem of converging blockchains, we have demonstrated how to create interoperability between multiple networks to secure settlement between different assets – this is a major step in the application of blockchain to the capital markets.”