Singapore Exchange (SGX) announced on 24th August that they planned to work with NASDAQ, Deloitte and Anquan to create ‘Delivery versus Payment’ (DvP) to be able to settle tokenised assets. This would create the conditions for ‘simulataneous exchange and final settlement of tokenised digital currencies and securities assets, improving operational efficiency and reducing settlement risks’.
DvP is a settlement mechanism via which securities and monies can be simultaneously exchanged while ensuring that the delivery of securities occurs when and only when the corresponding payment is made. The three partners NASDAQ, Deloitte and Anquan will be utilising open source code which was developed during the phase two of Project Ubin. The endeavour will be examining the potential of using smart contracts when it comes to automating DvP settlement processes and present a report for the same by November 2018.
Project Ubin was launched in 2016 and developed a simple prototype on the Ethereum platform during its first phase. During this phase, the utilisation of Distributed Ledger Technology presented a number of unique challenges and obstacles. The second phase aims to solve the challenges centred ‘around the need for transactional privacy and deterministic finality’ along with ‘the ability to perform multilateral netting capabilities in a decentralised manner while preserving transactional privacy’.
In talking about the venture that is about to be undertaken by the Monetary Authority of Singapore (MAS), the Chief FinTech officer of MAS, Sopnendy Mohanty has this to say:
“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.”
The Financial Services Industry Leader at Deloitte Southeast Asia, Ho Kok Yong, added:
“Deloitte is excited to partner SGX and MAS on this initiative and extend our expertise in blockchain technologies in conjunction with our APAC Blockchain Lab to make this visionary project a success. Using two different open source blockchain technologies to implement and design the Distributed Ledger Technologies (DLT) prototype, we are able to mitigate counterparty risks in DvP (Delivery versus Payment) and achieve DvP settlement finality with clearing members. This will also enable transactions to be facilitated in a secure and transparent way, in turn strengthening investors’ experience and confidence.”
The Senior Vice President and Head of Product Manager at NASDAQ, Magnus Haglind, also chimed in about the project:
“In our experience of developing projects to leverage blockchain to improve market and operational efficiencies, the willingness to collaborate by cross-industry parties was – and is – the most essential component for success. As we partner to develop technological capabilities to bridge between blockchains from both SGX and MAS, we are excited to join forces in backing and advancing Singapore’s focus on building a Smart Financial Centre ecosystem.”
