Another blockchain win for Singapore’s financial ecosystem
ASSETS in the financial world are often traded in exchange for “payment”, due before or at the time of the transfer of the asset — and is known as Delivery versus Payment (DvP).
Usually, the settlement of such transactions takes up to 3days (T+3 days) from the date of the transaction. However, experts believe that blockchain can help shorten the settlement process, and Singapore seems to be the first to deliver a successful prototype.
The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) have just announced the successful development of DvP capabilities for the settlement of tokenized assets across different blockchain platforms, and hopes that the effort will help simplify post-trade processes and further shorten settlement cycles.
“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,” said MAS Chief Fintech Officer Sopnendu Mohanty.
The DvP prototypes, developed with technology partners Anquan, Deloitte, and Nasdaq, demonstrate that financial institutions and corporate investors can carry out the simultaneous exchange and final settlement of tokenized digital currencies and securities assets on different blockchain platforms.
According to the MAS, the ability to perform these activities simultaneously improves operational efficiency and reduces settlement risks.
The collaboration also demonstrated that DvP settlement finality, interledger interoperability, and investor protection can be achieved through specific solutions designed and built on blockchain technology.
In fact, MAS and SGX have jointly published an industry report to explain how automating DvP settlement processes with Smart Contracts can help the industry.
The report also identifies key technology and operational considerations to ensure resilient operations and defines a market framework that governs post-trade settlement processes such as arbitration.
“The concept of asset tokenization, 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,” explained Mohanty.
The announcement was made ahead of the commencement of the third edition of the weeklong Singapore Fintech Festival that ends on November 16 this year. The event expects to see 250 speakers, 450 exhibitors, and nearly 40,000 participants — and hopes to meet with several exciting fintech businesses and professionals from across the world.