The Evolution of Legacy Market Infrastructure

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Bursa Malaysia Takes First Steps to Test the Dematerialization of the Issuance of Physical Securities using Digital Asset’s Daml with VMware Blockchain

Capital Markets are seeing unprecedented growth and innovation across the systems and market infrastructure powering our global economy. In a recent Nasdaq study commissioned from Celent, CIO Market Infrastructure Survey 2021: The Digital Journey to 2025, capital markets were ranked as one of the top industries preparing for massive changes in the next few years.

Predicting a 45% increase in the number of the Market Infrastructure (MI) providers with fully modernized technology stacks by 2025, Celent states that, “a combination of drivers, including regulatory, market forces, emerging digital models, and lately, the pandemic response, are contributing to a shift in the technology and data demands of market infrastructure.”

As market infrastructure evolves to support new digital models and asset classes, many firms are moving forward with POCs that validate investments in digital transformation initiatives to improve how exchanges, clearing houses, and custodians operate across the holding chain.

One initiative of testing such innovative solutions is Bursa Malaysia’s dematerialization project with Digital Asset and VMware Blockchain.

Bursa Malaysia Berhad will test Digital Asset’s multi-party application platform, Daml, on VMware Blockchain in automating the issuance of Structured Warrants. Daml extracts and simplifies business processes to make data accessible and optimize workflows using smart contracts. It is through Daml that issuers can create new warrants as smart contracts with unique identifiers, and register the number of shares and expiry date on VMware Blockchain. This not only eliminates the use of paper, but also improves manual handling and timely reconciliation processes between systems.

The dematerialization process is estimated to save hundreds of hours in the listing, registration and depository process at Bursa Malaysia, not to mention the 1.2 million pieces of security paper that the current process consumes. Daml was chosen as the application platform due to the speed and accuracy with which the development framework could model asset lifecycle workflows. While the proof-of-concept is for the dematerialization of Structured Warrants specifically, it is part of the firm’s larger aim to achieve full dematerialization of all physical securities traded on The Exchange.

Digital Asset’s technology and services are already being used by five of the top 10 exchanges, including Hong Kong Exchange and Clearing, the Australian Securities Exchange (ASX) and Nasdaq, to name a few.

The Bursa Malaysia dematerialization project is one of many major initiatives coming from this leading global exchange. Watch this space, particularly in the run up to the Network Forum Asia in November.

Click here to learn more about the Bursa Malaysia POC testing Digital Asset's multi-party application platform, Daml, on VMware Blockchain. 

Further Reading

ASX Gives Digital Asset’s Technology Green Light to Replace CHESS
Committed Settlement: Adoption under UK Law, an analysis by Linklaters
The Demex Group Explains Why Daml and Sextant Provide the Necessary Technology Foundation for a Successful Climate Resiliency Platform
Broadridge Reimagines Repo Markets with Smart Contracts and Distributed Ledger Technology