News Risk Management29 Aug 2018

Singapore:MAS and Singapore Exchange in technology collaboration to tap blockchain technology for tokenised asset settlement

29 Aug 2018

The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) have announced a collaboration to develop Delivery versus Payment (DvP) capabilities for settlement of tokenised assets across different blockchain platforms.

DvP is a settlement procedure where securities and monies are simultaneously exchanged to ensure that delivery of securities occurs if and only if the corresponding payment is made.

The collaboration will allow financial institutions and corporate investors to carry out simultaneous exchange and final settlement of tokenised digital currencies and securities assets, improving operational efficiency and reducing settlement risks.

Three companies, Anquan, Deloitte and Nasdaq have been appointed as technology partners for this project. They will leverage on the open-source software developed and made publicly available in phase 2 of ‘Project Ubin’. The project will produce a report, to be released by November 2018, that examines the potential of automating DvP settlement processes with smart contracts and identify key design considerations to ensure resilient operations and enhanced protection for investors. 

Project Ubin started in November 2016 as an industry collaboration to explore the use of distributed ledger technology for clearing and settlement of payments and securities, with the aim of understanding DLT’s potential in making financial transactions and processes more transparent, resilient and at lower cost.

The first two phases of Project Ubin focused on domestic inter-bank payment and settlement, with phase 2 successfully developing software prototypes of three different models for decentralised inter-bank payment and settlements with decentralised netting of payments in a manner that preserves transactional privacy. The source-codes and technical documentations are available for public access for central banks, financial institutions and academic institutions to facilitate their experiments, research and innovation.  

MAS chief fintech officer Sopnendu Mohanty said, “Blockchain technology is radically transforming how financial transactions are performed today, and the ability to transact seamlessly across blockchains will open up a world of new business opportunities. The involvement of three prominent technology partners highlights the commercial interest in making this a reality. We expect to see further growth in this space as FinTechs leverage on the strong pool of talent and expertise in Singapore to develop innovative blockchain applications and benefit from the new opportunities created.”

SGX head of technology and project chair Tinku Gupta said, “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. This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem.”

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