Singapore to launch tokenised securities settlement system
Security tokens differ from regular cryptos by deriving value from external tradable assets. The DvP platform will settle such trades automatically
The Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have been working together to develop a Delivery versus Payment (DvP) system to ease the settlement of tokenized securities payments.
According to the MAS and SGX, which announced the initiative on Saturday, the new platform will help “simplify post-trade processes and further shorten settlement cycles.”
The idea is that the DvP platform, that uses blockchain-based smart contracts, can settle tokenized settlements, even across different blockchain platforms, automatically by issuing the security tokens as the corresponding payment is made.
According to the Straits Times, the project has been developed along with technology partners Anquan, Deloitte and Nasdaq and will be compatible with multiple different blockchain platforms allowing for seamless trading and settlements for this growing asset sector.
“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 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,” said MAS chief fintech officer Sopnendu Mohanty.
Nasdaq senior vice-president Magnus Haglind said the collaboration with SGX and MAS allowed for a “unique ecosystem of converging blockchains” that has “demonstrated how to create interoperability between multiple networks to secure settlement between different assets. It is, added Haglind, “a major step in the application of blockchain to the capital markets.”
Tinku Gupta, SGX’s head of technology, said the platform has caused the exchange to apply for its first technology patent.
Security tokens are a little different to regular crypto-currencies in that they usually derive their value from an external tradable asset. Because these tokens are deemed securities, they are subject to federal securities and regulations in the US, but not necessarily elsewhere. The DvP platform is now being used for security token settlement but the same technology may be applied to any digital token or coin.