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SGX and Temasek: "Building digital asset infrastructure for financial markets"

SGX's Rehan Ahmed and Temasek's Pradyumna Agrawal discuss the joint venture between the two organisations to build a full fledged infrastructure for digital assets in Asia, its growth potential and drivers as well as issues and challenges surrounding building an end-to-end infrastructure and adoption by issuers and market participants

February 19, 2021 | Foo Boon Ping

Singapore Exchange (SGX) and Temasek, the Singapore government owned investment company, announced in January 2021 a joint venture (JV) that claims to be Asia Pacific’s first exchange-led digital asset programme focused on capital markets workflows through smart contracts, as well as ledger and tokenisation technologies. The JV called Marketnode builds on a previous initiative between the two organisations and HSBC, as arranger bank, that issued a public syndicated digital bond for Olam International in August 2020, said to be the first of its kind in the region.

SGX’s digital asset issuance, depository and servicing platform was used to issue four digital bonds by several issuers, with a total size of over SGD1 billion ($754.26 million).

The Marketnode partnership combines SGX’s multi-asset experience operating in regulated market infrastructure, together with Temasek’s expertise in blockchain technology and ecosystem connectivity. The venture had also acquired a minority stake in Covalent, B2B financial technology company specialising in capital market solutions.

It will tap on the accelerated need to digitalise and optimise workflows to meet demand for capital in Asia, starting with fixed income (FI). The partnership is poised to consolidate primary FI workflows as bond issuances continue to grow in Asia ex-Japan, where G3 (US dollar, euro and Japanese yen) primary issues have grown 46% to $387 billion over the last two years, totalling more than 800 new issues in 2020 with more than 450 issuers and 200 arranger banks.

Marketnode and Covalent will work together to streamline the listing, straight-through processing and settlement of bonds and activities in bond lifecycle management. It will connect Covalent’s OMAS platform, which is a front-end issuing, data, book building and allocations tool, with SGX’s listing, post-trade and asset servicing capabilities, thereby...

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Keywords:Bonds, Financial Market, Blockchain, Poc, Digital Lender