Inside 1exchange: The World’s First Regulated Private Securities Exchange

Asia Blockchain Review

September 17, 2019

Asia Blockchain Review recently spoke to Choo Haiping, CEO of 1exchange or ‘1X’, the world’s first licensed and regulated private securities exchange on a public blockchain, built by ConsenSys and CapBridge Group. Haiping talked about how 1X fills an existing gap in the equity market, enhancing the ease of use for investors, working with companies to list their equities without the hassle of expensive IPOs, and his vision for 1X moving forward. 

Asia Blockchain Review: What is the vision of 1X, and what services do you provide?

Choo Haiping: 1exchange (1X) is the world’s first fully regulated and licensed private securities exchange. Our vision is to be the preferred regulated venue for companies and investors to list and trade private securities in a fair, transparent, and orderly manner. 

For companies, we enable a new, regulated, and secure option of listing private equities to access global liquidity. For investors, we provide a better way to invest in private equity by providing greater transparency, liquidity, and access for this high-demand asset class. 

 

ABR: How is 1X filling an existing gap in the equity market?

CH: Based in the global leading financial hub of Singapore, 1X is the world’s first licensed and regulated private exchange to be built on the public Ethereum blockchain. This opens up access to a global liquidity pool for companies who list on 1X.

Companies seek to list on public exchanges for various reasons — to raise capital, expand investor reach, provide liquidity for stakeholders, etc.

However, not all companies are ready to go public some are hampered by high costs, while others may not yet be ready to cope with the more onerous compliance requirements. These companies, therefore, find themselves unable to unlock the full value of their shares. 

1X provides a flexible and cost-effective option for companies through private listing, where only a portion of their shareholders are listed and traded on 1X’s private exchange. In this way, companies can access global liquidity, existing shareholders can enjoy exits, while new investors can participate in the continued growth of these companies. 

ABR: Can you tell us about the technology behind 1X? What are the benefits of your blockchain solution?

CH: We worked with global leading blockchain technology company ConsenSys to build 1X on the public Ethereum network the largest and most mature blockchain system with over 70 million unique addresses created and a rapidly growing user base, together transacting hundreds of millions of dollars in value daily.

1X leverages the public Ethereum network to register and track the shareholdings of investors who trade in private securities listed on its platform. This allows global investors who are already active on Distributed Ledger Technology (DLT) exchanges to invest in high-growth companies via the regulated and tradeable private equities on 1X, as well as track their shareholdings directly and independently via their digital wallets.

 

ABR: Can you tell us about your first listing, Aggregate Asset Management? What was the result of AAM’s fundraising campaign?

CH: Aggregate Asset Management is an award-winning financial services company based in Singapore. Aggregate’s management wanted to raise capital, while at the same time, provide liquidity to its stakeholders to thank them for their many years of support. They also decided that it was premature for them to do an IPO, and hence agreed to do a private listing on 1X. 

The fundraising campaign was very popular, raising an oversubscribed S$5.6 million, exceeding the original target of S$5.2 million. This result demonstrates the strong demand for tradeable private equity from investors. 

 

ABR: How does 1X demonstrate the ways in which traditional businesses and markets are crossing over to the use of decentralized protocol technology?

CH: Decentralized protocol technology or blockchain is already widely deployed across many industries, such as payments, logistics, financial services, etc., as well as advancing new business models. 1X is applying blockchain for capital markets — a highly regulated industry with many traditional incumbents. 

In the current capital markets, multiple parties keep separate records of shareholders, leading to high costs of reconciliation as well as increasing chances of error. These parties include the exchange, clearing house, brokers, custodians, etc. In addition, their disparate systems and regulations discourage cross-border investing, and hence most capital markets are localized and operate within their domestic market, with no connectivity with other exchanges.

By building on the public Ethereum network, 1X is able to leverage its global user base which includes investors looking to access new asset classes and potentially connect to other applications and/or exchanges built on the same Ethereum standards. 

With a secure and decentralized database for shareholder tracking, 1X is able to lower costs and reduce redundancies for the trading and settlement process. 

ABR: Can you tell us about the landscape of Singapore’s fintech market? What is the environment for companies that utilize blockchain technology like 1X?

CH: Singapore is a prime location for fintech companies to establish their presence and grow. It has a long history of active collaborations between ambitious startups and visionary financial institutions such as banks. 

The Monetary Authority of Singapore (MAS), which is our central bank and key regulator, is highly progressive and supportive of fintech ventures. For instance, the MAS hosts an annual fintech festival to showcase the best and latest as well as provide opportunities for industry peers to network and collaborate. 

The MAS sees providing transparency and managing risks in private markets as a key initiative, and therefore, also supported 1X as the first and only fully licensed and regulated private exchange leveraging blockchain in Singapore. 

 

ABR: What developments can we expect to see from 1X in 2019-2020?

CH: We expect to see more private listings on 1X, as well as to expand our product range to include more alternative assets, which may include private funds and other private securities. 

We also intend to develop and deploy new and more features on our private exchange using blockchain technology.

 

ABR: How is 1X transforming the equity market with its cutting-edge technology?

CH: 1X leverages blockchain to enable previously illiquid private securities to become listed and access global liquidity, in a flexible, cost-effective, and regulated manner.


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Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. We aim to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

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