Malaysia stock exchange explores blockchain bond market
The blockchain proof of concept, named Project Harbour, explores the DLT management of Malaysia’s bonds market
Malaysia’s National Stock Exchange (Bursa Malaysia) has revealed its plans to tokenize bonds, in collaboration with the fintech firm Hashstacs.
Project Harbour is the name of the initiative given by the local stock exchange that is dedicated to exploring Distributed Ledger Technology (DLT). The first step in the project will involve the development of a register for Labuan Financial Exchange (LFX), a bond marketplace and a subsidiary of Malaysia’s stock exchange.
The Chief Executive Officer of Bursa Malaysia, Datuk Muhamad Umar Swift, stated that the project’s primary aim is to develop the potential of blockchain to look into the possibilities associated with asset tokenization.
“The POC conducted in partnership with Hashstacs presents an opportunity to provide a valuable learning experience to build knowledge and obtain insights that will allow us to grow the bond marketplace.” he said.
Swift explained that this proof of concept is looking at increasing operational efficiency, cutting down on the costs associated with operations as well as the costs 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,” Swift said.
Hashstacs is a fintech development firm from Singapore. The company specialises in asset management, custody management, post-trade settlements, digital identity and financial inclusion.
The testing and management of tokenized bonds for this project will happen on the company’s Trident Platform. Several local banks, such as the CIMB Investment Bank, Maybank Investment Bank and China Construction Bank will be the first users of the platform, alongside the Securities Commission of Malaysia and Bursa Malaysia.
Hashstacs will also build a blockchain solution to enable issuing, serving, trading and clearing bonds from within the platform.
Finally, smart contract technology has been enabled to seamlessly automate the movement of funds and securities. This increases the asset servicing as well as the provision of liquidity to market participants.
The Managing Director of Hashstacs, Benjamin Soh, explained that these developments are a crucial step forward in Malaysia’s efforts to attract regional and 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,” Soh said.
Malaysia is known to have one of the most developed and dynamic bond markets in Southeast Asia and has the largest local currency bond market in the Association of Southeast Asian Nations (ASEAN).