Asian banks' trials with 'tokenised securities' stuck in silos - industry body

Celestial Asia Securities Holdings

24/06/2021 03:40

By Alun John
    HONG KONG, June 24 (Reuters) - Asian financial regulators
should do more to support large-scale trials of "tokenised
securities", an industry body said on Thursday, since banks and
technology firms' current experiments are stuck in different
silos, hindering the pace of change.
    Tokenised securities are products like shares and bonds
whose proof of ownership is recorded on a distributed ledger,
the technology that underpins other digital tokens such as
bitcoin.
    Many banks are exploring the concept, hoping it will help
them price and settle transactions more efficiently.
    But trials so far involve "three or four firms working
together on proofs of concept which are not interoperable", said
Laurence Van der Loo, executive director for technology and
operations at financial industry body the Asia Securities
Industry and Financial Markets Association (ASIFMA). 
     "What we think should be the next step is a
regulator-endorsed full-ecosystem experiment that would explore
all the interactions and competitive dynamics. Everyone flags
interoperability as a key concern, but all the experiments are
still siloed," Van der Loo said. 
    An ASIFMA report on Thursday said regulators should expand
the scope of their existing sandboxes for experimenting with
fintech initiatives to enable industry-wide trials. 
    Regulators in Hong Kong, Singapore and Japan have already
issued some guidelines about tokenised securities. DBS  DBSM.SI 
issued a S$15 million ($11.14 million) bond as a "security
token" on its recently established cryptocurrency exchange last
month. 
    However, the ASIFMA report said regulatory and legal
challenges were still the main obstacles for companies involved
in tokenised securities. 
    Van der Loo also said banks were further along than asset
managers when it came to tokenising securities. 
    "At the moment it is very much the sell side looking into
this to see the efficiencies it can bring. The buyside interest
needs to be there as well, but it is coming," Van der Loo said. 

($1 = 1.3462 Singapore dollars)

 (Reporting by Alun John in Hong Kong. Editing by Gerry Doyle
)
 ((alun.john@thomsonreuters.com))