SGX and national regulator develop tokenised asset settlement

The Monetary Authority of Singapore and Singapore Exchange developed two Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms.

Singapore’s markets regulator and national exchange said they have successfully leveraged blockchain technology for settlement of tokenised assets.

The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) developed two Delivery versus Payment (DvP) prototypes allowing the simultaneous exchange and final settlement of tokenised digital currencies and securities assets on different blockchain platforms.

Tokenisation has become one of the widely-discussed industry topics during 2018, with clear post-trade benefits to converting assets to a digital representation through distributed ledger technology. The tokenisation of non-traditional assets such as artwork, real estate and diamonds has also been suggested by multiple participants.

A joint statement from MAS and SGX said the new technology will “simplify post-trade processes and further shorten settlement cycles.”

“We are delighted to drive this important industry effort to accelerate innovation in the marketplace,” said Tinku Gupta, head of technology at SGX and project chair. “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.” 

Last month, speakers at SWIFT’s annual Sibos conference said that “the jury was out on DvP settlement” in a tokenised blockchain ecosystem, responding to claims that through DLT you might not need it.

SGX and MAS developed their prototypes with technology partners Anquan, Deloitte and Nasdaq. Participants said the collaboration also demonstrated that DvP settlement finality, interledger interoperability and investor protection can be achieved through specific solutions designed and built on blockchain technology.

Following its conclusion, MAS and SGX jointly published an industry report, which provides a comprehensive view of automating DvP settlement processes with Smart Contracts. The report also identifies key technology and operational considerations to ensure resilient operations, and defines a market framework that governs post-trade settlement processes such as arbitration.