Malaysia's National Stock Exchange Conducts Blockchain PoC to Digitize Bond Market

Malaysia’s national stock exchange, Bursa Malaysia will conduct a blockchain Proof-of-Concept (PoC) dubbed "Project Harbour" to explore the DLT management of the country’s bonds market.

Project Harbour is an initiative that will leverage distributed ledger technology (DLT) to digitize and grow Malaysia's offshore bonds market—the Labuan Financial Exchange (LFX), a wholly-owned subsidiary of Bursa Malaysia.

According to the announcement on July 30, Malaysia’s national stock exchange will collaborate with Singaporean fintech firm Hashstacs who will develop the blockchain infrastructure to digitize the LFX bonds market.

Malaysia First Movers

Project Harbour seeks to explore DLT and the tokenization of bond assets. By creating a blockchain-based infrastructure—the aim is to provide a single shared distributed database to be leveraged by Bursa Malaysia and participating banks of the project.

According to the announcement, the initiative aims to improve the overall efficiency of Malaysia’s digital bonds market by providing a register of ownership as well as reduce counterparty risks and reconciliation costs. The platform will also use smart contracts to automate the movement of funds and securities and enhance asset management and liquidity for market participants.

Mr Benjamin Soh, Managing Director of Hashstacs, said: " 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."

Hashstac’s blockchain infrastructure will be leveraged by Bursa Malaysia, the Securities Commission of Malaysia, Labuan Financial Services Authority, and others including China Construction Bank and CIMB Investment.

Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia, said: "The PoC aims to increase operational efficiency, driving down the cost of operations as well as the cost 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"