Singapore Stock Exchange to Adopt Blockchain for Faster Settlements
Singapore’s stock exchange has decided to work with Singapore’s de facto central bank, the Monetary Authority of Singapore (MAS), to utilize blockchain tech in order to improve the speed of securities settlements.
The Singapore Exchange (SGX) said in a release on 24 August, Friday, that the partnership with the MAS aims to scale up the city-state’s Delivery versus Payment (DvP) capacity so that it can automate transactions through blockchain-based smart contracts. Delivery versus Payment (DvP) is the settlement process responsible for ensuring that assets are transacted only when payments are received.
According to the release, big firms like Nasdaq, professional services firm Deloitte, and startups like Anquan Capital Pte Ltd, are going to lend technological support for the project.
The goal of the project is to successfully develop a distributed network where both investors and financial institutions can transact securities already converted into digital tokens through blockchain platforms.
The partners said that the technology for the project will be developed based on the open source code resulting from the second phase of Project Ubin, which the Monetary Authority of Singapore initialed in 2016, settling interbank transactions using distributed ledger technology.
According to the announcement, a report detailing key design considerations will be released by the exchange in November.
Tinku Gupta, Project Chair, and Head of Technology at the Singapore Exchange said in a statement:
“This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers’ and sellers’ risk in the DvP process.”
However, the Singapore Stock Exchange is not the only securities trading platform that’s exploring blockchain to improve the efficiency of securities settlements.
The Australia Securities Exchange is currently planning to replace its existing settlement system built with blockchain-based startup Digital Assets Holdings. The new system is expected to roll out in 2020.