KUALA LUMPUR: Bursa Malaysia Bhd has completed its first securities borrowing and lending (SBL) proof-of-concept (POC 1) blockchain technology solution designed to increase the efficiency, speed and capacity in the securities lending supply and borrowing demand.
SBL POC 1 was executed and tested with technology partner Forms Syntron Information (HK) Ltd, a subsidiary of Shenzhen Stock Exchange-listed Shenzhen Forms Syntron Information Co Ltd, and industry collaborators Affin Hwang Investment Bank Bhd, CGSCIMB Securities Sdn Bhd, Citibank Bhd, Kumpulan Wang Persaraan (Diperbadankan) and Malacca Securities Sdn Bhd.
A first of its kind in the Asean, SBL POC 1 was executed using an agile methodology comprising robust design thinking, development and testing stages. SBL POC 1 was a successful test of a private-permissioned blockchain-driven SBL lending pool that can enhance market discovery, create increased efficiencies as well as build transparency and trust. It has secure, shared ledgers and smart contracts which enable instant and automated update of asset status. 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 CEO Datuk Muhamad Umar Swift (pix) said evidence shows that a vibrant SBL 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.”
SBL POC 1 is the kickoff to a longer-term holistic roadmap that leverages emerging technology to address challenges in the SBL market. POC 1 targets the SBL lending pool, the fundamental building block of this roadmap, and sets up the future possibility of developing and testing a blockchain solution that can transform the execution, collateral management and corporate action management areas of Malaysia’s SBL market.
Bursa Malaysia welcomes greater industry collaboration and partnerships for future POCs with the aim of building a future-ready end-to-end SBL technology-driven solution in aid of its progress towards a developed market.