The Monetary Authority of Singapore (MAS), the country's central bank and financial regulatory authority, and Singapore Exchange (SGX) have developed Delivery versus Payment (DvP) capabilities for settlement of tokenized assets across various blockchain platforms.
Image: MAS, SGX develop blockchain-based payment system. Photo: Courtesy of Markus Spiske/Unsplash.
MAS said that that the move will help in simplifying post-trade processes and further reduce settlement cycles.
Technology partners Anquan, Deloitte and Nasdaq helped in the development of the DvP prototypes, which showed that financial institutions and corporate investors can carry out the simultaneous exchange and final settlement of tokenized digital currencies and securities assets across several blockchain platforms.
The ability to carry out the activities simultaneously will enhance operational efficiency and decrease risks in settlement.
The collaboration between MAS and SGX also showed that DvP DvP settlement finality, interledger interoperability and investor protection can be achieved with solutions designed and built on blockchain technology.
After this demonstration, MAS and SGX published an industry report offering a comprehensive view of automating DvP settlement processes with Smart Contracts.
The report identified key technology and operational considerations that make the operations resilient and define a market framework that governs post-trade settlement processes such as arbitration.
MAS chief fintech officer Sopnendu Mohanty said: “Blockchain technology and asset tokenisation are fuelling a new wave of innovation globally. 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.
“The concept of asset tokenisation, 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.”
In the report, it was stated that the DvP-on-DLT project is an extension of Project Ubin, a collaborative project by Singapore’s financial services industry to explore the use of distributed ledger technology (DLT) for clearing and settling payments and securities.
It was launched in 2016 by the Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS).
SGX and project chair technology head Tinku Gupta said: “We are delighted to drive this important industry effort to accelerate innovation in the marketplace. Based on the unique methodology 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.”