Citi and HSBC Join Marketnode Pilot for Singapore Blockchain Fund Settlement – Ledger Insights

Singapore Marketnode, a joint venture between the Singapore Stock Exchange (SGX) and public investment firm Temasek, has announced plans to launch the blockchain-based FundNode in association with the Singapore Funds Industry Group (SFIG) in 2023 .

The industry-wide solution aims to provide a centralized hub for asset managers to record transactions, process funds and for record keeping. Similar initiatives have been launched in other regions to reduce fund administration and distribution costs and enable new business models. By having a golden record of transactions, the solution can reduce or eliminate reconciliations between participants involved in the distribution of funds.

Initially, the platform will target workflows for funds for retail investors or licensed collective investment schemes. However, it plans to expand the range of fund types, support corporate actions, ESG labeling and integrate with international platforms.

“We are pleased to see the asset management industry working closely with Marketnode to jointly conceptualize a fund settlement utility to streamline post-trade settlement processes,” said Gillian Tan, Deputy Managing Director of MAS and co-chair of the executive committee of SFIG. “Through this project, we hope the industry will benefit from faster settlement times and lower transaction costs, which will ultimately benefit end investors.”

The pilot phase will include:

  • fund distributors: DBS, OCBC Bank, Phillip Securities, Navigator Investments, UOB Kay Hian and UOB
  • fund managers: abrdn, Fullerton Fund Management, Mandiri Investment, Schroders Investment Management and UOB Asset Management
  • transfer agents and service providers: Apex Group, Citi, Deutsche Bank, FNZ, HSBC and State Street)
  • Custodian banks of the Caisse Centrale de Prévoyance (CPF).

Several participants are involved in other blockchain initiatives, and in some cases the projects are fund-specific. For example, Apex recently acquired FundAdminChain and asset manager abrdn invested in digital asset exchange Archax.

In 2021, FNZ launched a similar solution to FundNode for the South African fund industry.

Carlyle-owned fund distribution company Calastone was the first to integrate Distributed Ledger (DLT) for its basic order routing in 2019. Other initiatives include Allfunds Blockchain, FundsDLT, PolySign, RealBlocks and Figure Technology .

To date, Marketnode has focused on blockchain-based bond issuance. In June, SGX CDP made the DLT bond issuance platform generally available and OCBC used it for a US$100 million commercial paper issuance. The solution cuts settlement times from five to two days.

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