Japanese financial conglomerate SBI is developing a commercial framework for the cross-border distribution of tokenized securities, conducting pilots in fixed income, asset management, and wealth management.
SBI Digital Markets (SBIDM) is constructing an end-to-end framework for primary and secondary market distribution of tokenized securities by establishing connections between regulated digital asset exchanges across various jurisdictions.
Winston Quek, CEO of SBI Digital Markets, stated, “From origination, tokenization, and distribution to digital custody, listing on digital asset exchanges, and building secondary trading, we have implemented workflows for efficient cross-border distribution networks. Our approach allows for dual issuances in both traditional and tokenized formats. By adopting open and interoperable architecture for both operational structuring and technology engineering, we enable institutional investors at different stages of digital transformation to join us and unlock efficiencies through blockchain technology.”
In its Fixed Income pilot, SBIDM has created a regulated structure for issuing securities in both traditional and tokenized formats to serve all investors. To enhance cross-border secondary market liquidity, SBIDM has connected regulated digital asset exchanges using a blockchain-agnostic technology and governance framework.
The framework is set to launch in the global secondary market within the next two months, starting with a structured note backed by luxury wines, followed by offerings in intellectual property and commodities.
Under the Asset and Wealth Management pilot, SBIDM is building on the momentum of its 2023 Project Guardian technical pilot with UBS Asset Management. This year’s pilot explores the commercial potential of a UBS tokenized fund featuring a Variable Capital Company (VCC) structure, alongside smart contract automation for fund subscription and redemption processes.
To enable cross-chain communication with the tokenized fund contract, SBI Digital Markets has developed a digital transfer agent smart contract utilizing Chainlink’s interoperability protocol, showcasing the ability to use smart contracts for streamlining fund operations across diverse blockchain networks and financial systems.
The Monetary Authority of Singapore is also participating in the tokenization trend, working to create an industry framework for the implementation of tokenized assets.
The central bank has partnered with Citi, HSBC, Schroders, Standard Chartered, and UOB to establish the Guardian Wholesale Network industry group, aiming to create a multi-member network to commercialize their respective asset tokenization trials and enhance usage.
Leong Sing Chiong, Deputy Managing Director of MAS, remarked, “MAS has observed significant interest in asset tokenization recently, particularly in fixed income, FX, and asset management. We are encouraged by the strong participation from financial institutions and other policymakers to collaboratively develop industry standards and risk management frameworks that facilitate the commercial deployment of tokenized capital market products, thereby scaling tokenized markets across the industry.”