Emerging technologies such as artificial intelligence (AI), blockchain and internet of things (IoT) are slowly making their presence felt. The world is waking up to the amazing feats that can be achieved with these technologies.
China is showing the way by experimenting and implementing AI, IoT and blockchain in various industries and emerging successful in most instances. Other nations are not far behind either in embracing innovation. Malaysia, for instance, is all set to explore blockchain for the national stock exchange (Bursa Malaysia Berhad).
The proof-of-concept (POC) blockchain project will be utilising DLT (Distributed Ledger Technology) as the register for the country’s bond market. This digitization plan for the Labuan Financial Exchange’s (LFX) bond marketplace is being called Project Harbour.
The asset tokenization project intends to utilise the power of blockchain to create a reference and a single truth source for all its participants, which also includes banks.
The Chief Executive Officer of Bursa Malaysia, Datuk Muhamad Umar Swift said, “The POC aims to increase operational efficiency, driving down the cost of operations as well as the cost of issuing bonds. We will continue to tap into emerging technological innovations to further develop the marketplace and improve the effectiveness and accessibility of the exchange.”
Hashstacs is a Singaporean fintech developing firm and specialises in custody management, asset management, post-trade settlements, financial inclusion as well as digital identity.
The tokenization testing and the management of the bonds will be done on the Trident Platform of Hashstacs and its first users will be renowned local banks including Maybank Investment Bank Berhad and CIMB Investment Bank Berhad.
The platform will utilise smart contract technology to automate and smoothen the movement of securities and funds within the system, thus allowing the liquidity provision for market participants and magnifying asset servicing.
Benjamin Soh, the Managing Director of Hashstacs believes that this is a pioneering move for the country and will prove to be an important stepping stone towards attracting local as well as international bond listings.
“The creation of an industry-wide ecosystem will allow for a complete solution in the origination, servicing, trading, clearing, and settlement, allowing Malaysia to potentially have the first-mover advantage in attracting regional and international bond listings,” he said.
The company is also set to develop a blockchain solution for issuing, trading, clearing and serving bonds.
The success of this step towards innovative technology-driven future by Bursa Malaysia will hopefully be a crucial turning point for the country.
Malaysia is already famed as one of the most developed bond markets in the whole of Southeast Asia and now using emerging technology like blockchain will surely make it even more dynamic.
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