Malaysia tests "first-of-its-kind" sec lending blockchain PoC
07 November 2019 Kuala Lumpur
Image: Shutterstock
Malaysia’s stock exchange has completed a proof-of-concept (PoC) for its blockchain-powered securities lending solution, which aims to increase the efficiency, speed and capacity of its lending pool, as part of a radical overhaul to the country’s lending market.
Bursa Malaysia’s PoC was conducted in collaboration with Citigroup’s Malaysian subsidiary, Malaysian investment bank Affin Hwang Investment Bank, Singapore-based CGS-CIMB Securities, Malaysian pension fund Kumpulan Wang Persaraan, and brokerage firm Malacca Securities.
The technology partner that executed and tested the PoC was Hong Kong-based Forms Syntron Information, a subsidiary of Shenzhen Forms Syntron Information.
Bursa Malaysia described the project as the first of its kind for the securities lending markets of the Association of Southeast Asian Nations region.
In a statement, the exchange said it has completed a successful test of the private-permissioned blockchain-driven ‘SBL Lending Pool’, which it says will enhance market discovery, create increased efficiencies as well as build transparency and trust.
The PoC has secure, shared ledgers and smart contracts which enable instant and automated update of asset status, the statement continued.
“Information stored in the ledger, like records of trade negotiations and order confirmations, are immutable, auditable and traceable. It avoids the need for manual reconciliation, which may introduce errors due to disparate methods of trade negotiation and order confirmation recording,” Bursa Malaysia explained.
According to Bursa Malaysia, the PoC represents the beginning of “a longer-term holistic roadmap that leverages emerging technology to address challenges in the securities lending market”.
The exchange stated that its SBL Lending Pool is the "fundamental building block of this roadmap,” which is targetting inefficiencies in execution, collateral management and corporate action management.
Bursa Malaysia said its ultimate aim is to build a “future-ready end-to-end, technology-driven solution” for the country’s securities lending market.
Commenting on the recent blockchain tests, Bursa Malaysia CEO, Datuk Muhamad Umar Swift, said: “Evidence shows that a vibrant securities lending market is one of the key characteristics of a developed capital market.
“As such, it is imperative that we tackle the operational challenges of today with a technologically driven solution that is flexible and scalable into the future. The PoC also brings in new knowledge, insights and practical experience in harnessing digital innovation - a core requirement of any exchange that aims to be a leader in its space in the future.”
Bursa Malaysia’s PoC was conducted in collaboration with Citigroup’s Malaysian subsidiary, Malaysian investment bank Affin Hwang Investment Bank, Singapore-based CGS-CIMB Securities, Malaysian pension fund Kumpulan Wang Persaraan, and brokerage firm Malacca Securities.
The technology partner that executed and tested the PoC was Hong Kong-based Forms Syntron Information, a subsidiary of Shenzhen Forms Syntron Information.
Bursa Malaysia described the project as the first of its kind for the securities lending markets of the Association of Southeast Asian Nations region.
In a statement, the exchange said it has completed a successful test of the private-permissioned blockchain-driven ‘SBL Lending Pool’, which it says will enhance market discovery, create increased efficiencies as well as build transparency and trust.
The PoC has secure, shared ledgers and smart contracts which enable instant and automated update of asset status, the statement continued.
“Information stored in the ledger, like records of trade negotiations and order confirmations, are immutable, auditable and traceable. It avoids the need for manual reconciliation, which may introduce errors due to disparate methods of trade negotiation and order confirmation recording,” Bursa Malaysia explained.
According to Bursa Malaysia, the PoC represents the beginning of “a longer-term holistic roadmap that leverages emerging technology to address challenges in the securities lending market”.
The exchange stated that its SBL Lending Pool is the "fundamental building block of this roadmap,” which is targetting inefficiencies in execution, collateral management and corporate action management.
Bursa Malaysia said its ultimate aim is to build a “future-ready end-to-end, technology-driven solution” for the country’s securities lending market.
Commenting on the recent blockchain tests, Bursa Malaysia CEO, Datuk Muhamad Umar Swift, said: “Evidence shows that a vibrant securities lending market is one of the key characteristics of a developed capital market.
“As such, it is imperative that we tackle the operational challenges of today with a technologically driven solution that is flexible and scalable into the future. The PoC also brings in new knowledge, insights and practical experience in harnessing digital innovation - a core requirement of any exchange that aims to be a leader in its space in the future.”
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