The joint venture will focus on capital markets workflows via smart contracts, ledger, and tokenisation technologies


SGX to set up a digital asset infrastructure JV with Temasek. (Credit: Terence Ong./Wikimedia Commons)

Singapore Exchange (SGX) has entered into a joint venture (JV) with Singaporean state-owned investment firm Temasek to advance digital asset infrastructure in capital markets.

Expected to be the first exchange-led digital asset venture in the Asia Pacific region, the JV will focus on capital markets workflows via smart contracts, ledger, and tokenisation technologies.

Under the partnership, Singapore Exchange’s multi-asset experience and strengths in operating market infrastructure will be combined with Temasek’s expertise in blockchain technology and ecosystem connectivity.

The JV will pursue partnerships with fixed income issuance platforms to link its post-trade and asset servicing infrastructure, offering issuers, arranger banks, lawyers, paying agents, investors, with an issuance-to-settlement network for Asia bonds.

According to Singapore Exchange, the JV will, at the same time, focus on other existing and emerging asset classes such as funds and sustainable finance that have witnessed increasing market demand.

Temasek blockchain managing director Pradyumna Agrawal said: “We have been tracking the evolution of financial market systems and the opportunities for development of digital infrastructure that will transform how financial transactions are conducted.

“We are pleased to partner SGX in this effort towards continual improvement of capital markets through the development of innovative end-to-end digital asset solutions.”

The creation of JV follows the collaboration between the partners and HSBC which resulted in the issuance of a public syndicated digital bond for Olam International last August.

Singapore Exchange said that so far, its digital asset issuance, depository, and servicing platform has been used to issue four digital bonds by various issuers, with a total size of more than S$1bn ($754.5m).

Singapore Exchange senior managing director and fixed income, currencies and commodities (FICC) head Lee Beng Hong said: “The early success in our digital bond issuance platform has paved the way for SGX to make a larger move into digital assets, and we are very excited to take our digital asset business to the next level in partnership with Temasek.

“Together, we will capitalise on digitalisation trends that continue to shape global capital markets, and advance the development of capital markets infrastructure in Asia.”

Meanwhile, Singapore Exchange reported adjusted net profit of S$228m ($172m) for 1H FY2021, a 7% growth compared to the same period of the previous year.