Singapore Exchange Limited (SGX) And The MAS Find Success In Blockchain Trial For Settling Tokenized Assets
Blockchain to be Used in Tokenized Assets Settlement by Singapore Exchange SGX
The future is all about looking ahead and taking a few risks along the way. When they fail, these missteps are quietly ignored. However, when they pay off, the foresight is widely celebrated. Singapore Exchange Limited (SGX) should be applauded after they announced a successful test run of their blockchain technology for tokenized assets settlement.
The SGX working in conjunction with the Monetary Authority of Singapore (MAS), issued a release on Sunday, 11th of November, discussing the test. It went on to detail the formation, parameters, and results.
The idea took a concrete shape back in August of this year after MAS and SGX had partnered with Nasdaq, the U.S. stock market, Deloitte, the multinational consulting and accounting firm and Anquan, a Singapore based tech company. The solution that they were looking work on was a blockchain-driven solution for Delivery versus Payment (DvP) capabilities. The exchange now has a settlement procedure where, upon successful delivery, the buyer's payment for securities is immediately due.
The promising trial showed that institutions and investors were able to easily carry out the transactions. Even when, exchange and settlement of tokenized assets on different blockchain platforms were done simultaneously, there were no reported issues. A spokesperson for Singapore Exchange noted how this increases the overall operational efficiency and will lead to reduced settlement risks. Furthermore, this could pave the way to incorporate smart contracts in order to automate DvP settlement processes.
Head of Technology at SGX, Tinku Gupta, also excitedly revealed the mood after the announcement, noting that this was the exchanges first-ever patent:
“Based on the unique methodology that 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.”
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It has been widely reported that many Singapore-based companies are actively seeking blockchain solutions and testing them in different areas to help innovate in their sphere. Not only the private sector but even the government is all in. In fact, in July, CrimsonLogic, a government-owned service provider unveiled its cross-border blockchain network for trade. They hope to boost the efficiency of trade corridors between China and the Association of Southeast Asian Nations (ASEAN) nations. Similarly, just last month, a major electricity and gas provider, SP Group, launched a blockchain-powered renewable energy certificate marketplace to buy and sell solar energy worldwide.
Taking a leaf out of their playbook, Nasdaq recently patented a smart-contract based information release system, which would allow for a better security system to store data before the issue of stocks, bonds etc. And other blockchain-related patents are on their way.
Technology and innovation go hand in hand. The technology is now already here, it patiently awaits its innovators to raise it to new heights. While some might prefer to see blockchain replace the current financial system altogether; a la Fight Clubs, Tyler Durden. There are many who are not so confronting. Small incremental steps could be just as effective as long as it is a step in the right direction.