SINGAPORE — Singapore-owned investor Temasek and the city-state’s stock exchange SGX on Friday announced a joint venture forming a company that will tap distributed ledger technology, or blockchain, to provide financial offerings for trading.
The company will look at using the tech to streamline the process of issuing and settling trading of listed products on the Singapore Exchange. It will start with bonds, funds and sustainable finance products, before potentially extending to cover other asset classes such as equities.
SGX had already collaborated with Temasek and HSBC Holdings last August to issue Asia’s first public syndicated digital bond for food and agri-business player Olam International. Digital bonds are supported by blockchain-based tech, which in principle simplifies the process for firms to issue fixed income products.
A handful of other issuers jumped on the bandwagon shortly after, allowing SGX to offer a total of four digital bonds worth over SG$1 billion and leading to the bourse and Temasek cementing their partnership in Friday’s announcement.
Bond issuers can potentially raise funds more quickly through a listing, while investors can have their trades settled more promptly with the help of distributed ledger technology.
“We are very excited to take our digital asset business to the next level in partnership with Temasek,” said Lee Beng Hong, head of fixed income, currencies and commodities at SGX.
“Together (with Temasek), we will capitalise on digitalisation trends that continue to shape global capital markets, and advance the development of capital markets infrastructure in Asia,” he added.
SGX said it believed it is the first exchange in Asia to tap blockchain-based tech to streamline the process of issuing and trading syndicated bonds.
This development potentially raises the allure of Singapore, which is competing hard with the Hong Kong Stock Exchange, as a regional center for companies to list fixed income products.
“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,” said Pradyumna Agrawal, managing director at Temasek. “We are pleased to partner SGX in this effort.”
Singapore is fast becoming a hub of activity in the area of blockchain-based digital assets trading. Southeast Asia’s largest lender, DBS Group Holdings, in December launched a digital exchange that allows investors to trade fiat money and cryptocurrencies. SGX has a 10% stake.
The bourse on Friday reported a profit after tax of SG$240 million for the six months ending in December last year — a 13% gain over the same period the previous year.
“Having established ourselves as a multi-asset exchange, we will continue to drive growth through strategic partnerships, client acquisitions and new product offerings,” said Loh Boon Chye, SGX’s chief executive, at a results briefing.