Citi, HSBC join Marketnode pilot for blockchain fund settlement in Singapore – Ledger Insights

Singapore’s Marketnode, a joint venture between the Singapore Exchange (SGX) and state investment firm Temasek, said it plans to launch the blockchain-based FundNode in partnership with the Singapore Funds Industry Group (SFIG) in 2023.

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

Initially, the platform will target workflows for funds aimed at retail investors or authorized 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 tool to streamline post-trade settlement processes,” said Gillian Tan, Assistant Managing Director MAS and Co-Chair of the SFIG Executive Committee. “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)
• Central Provident Fund (CPF) agent banks.

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

In 2021, FNZ launched a similar solution as FundNode for the South African funds sector.

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

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