In the financial world, assets are often used in trading for “payment” when it’s time for the transfer of the asset. This is also known as Delivery versus Payment.
With the normal way of settlement of such transactions, It usually takes the beneficiary up to 3 days (T+3 days) to receive the payment since its sending date. It may have worked in the past and up until now, but in an internet era where everything is counted by seconds i.e today 3 days for a settlement of the transaction is too long. Fortunately, Blockchain can cut down this bulky process by its platform and Singapore seems to be the first country realizing this advantage while planning to deliver a successful prototype.
The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) have just excitedly announced their success in developing DvP capabilities for settlement of Tokenized assets based on different blockchain platforms and hope that the effort will make the post-trade processes more simple and towards shortening settlement cycles.
MAS chief Fintech Officer Sopnendu Mohanty stated that the project had demonstrated the value of blockchain technology and the benefits it could bring to the financial industry in the short to medium term.
MAS and SGX developed the DvP prototypes with their technology partners including Anquan, Deloitte, and Nasdaq to support users on many kinds of blockchain platforms even if they are financial institutions or corporate investors, everyone will be able to carry out the simultaneous exchanges or final settlements of tokenized digital currencies and securities assets.
According to the MAS, the ability to perform these activities simultaneously also supports users by checking their purchasing process thoroughly, further improving operational efficiency and reducing settlement risks.
The collaboration also demonstrated that through specific solutions designed and built on blockchain technology we can achieve DvP settlement finality, inter-ledger interoperability, and investor protection.
In fact, MAS and SGX have proven the usages of DvP settlement processes as a supporter of the industry by its Smart Contracts through an industry report published recently.
The report positions key technology and operational considerations as ensuring resilient operations and defining a market framework that governs post-trade settlement processes such as arbitration, which are also defined by MAS and SGX.
In addition, Mohanty explained that the concept of asset tokenization, similar to other learnings, taken from that project, could potentially be applied to a broad spectrum of the economy, toward creating a whole new world of opportunities.
The announcement was made ahead of one of the biggest Fintech events in Singapore-the Weeklong Singapore Fintech Festival, that ended on November 16th this year. It had a turnout of 250 speakers, 450 exhibitors, and nearly 40,000 participants. Singapore Fintech Festival is desirable to meet several exciting Fintech businesses and professionals from all around the world. Being published in a big event like this showed Blockchain won again and potentially infiltrated Singapore’s financial ecosystem.
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