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Malaysia will use blockchain for securities borrowing and lending

According to a recent report, the stock exchange of Malaysia will be working with bank stakeholders in developing Southeast Asia’s first blockchain proof-of-concept for securities borrowing and lending.

The Malaysian stock exchange is planning a blockchain-powered SBL (securities borrowing and lending) proof-of-concept, the first of its kind in Southeast Asia.

The project will explore the opportunities afforded by blockchain technology to develop greater transparency, and to address other operational challenges associated with the SBL market in the country, the Malaysian stock exchange noted.

It was noted that the project aims to ramp up efficiency, speed, and capacity in securities lending supply and borrowing demand.

The proof-of-concept, developed with the country’s stock exchange’s technology partner which is a wholly-owned subsidiary of Shenzhen-listed professional IT outsourcing services firm, will involve a diverse range of SBL market participants.

The two parties are also collaborating with banks and other financial institutions to drive the development of a blockchain-enabled lending pool to suit industry-specific needs, cost and efficiency pressures.

The growth potential of Malaysia’s SBL market makes it a prime candidate where the power of blockchain technology can create a considerable impact, according to the Chief of the stock exchange, who also cited studies that showed how short selling can help provide additional liquidity and improves price efficiency across different markets.

The collaboration benefits the wider industry through new knowledge, insights and practical experience in harnessing digital innovation to support and drive the growth of the capital market.

The stock exchange’s focus on technology-driven innovation will bring new opportunities, partners and ways of working that increase the exchange’s agility and ability to future-proof its business, and deliver its promise of “Creating Opportunities, Growing Value”.

Digital technologies such as blockchain can not only create powerful information systems but also bring about a fundamental shift in how the market works, thinks and hire, the statement said.

Moreover, the process of harnessing this technology to deliver efficient and transparent solutions in the Malaysian market is a valuable learning experience that builds knowledge and mastery to accelerate Malaysia’s drive towards becoming a developed market.

Blockchain in Malaysia

The adoption and application of DLT technology are becoming more popular in Malaysia over the last year.

In March 2019, Malaysia plans blockchain deployment to track agri-products chain, OpenGov Asia reported. DLT will enable authorities and consumers to map the journey of agri-products from the labs and farms.

The idea to incorporate blockchain functionalities in a tracking system was announced by Malaysia’s Agricultural Minister. The tech would improve reliability and control over agricultural products in the country.

A few weeks later, it was reported that Malaysia will be developing its first vehicle blockchain. The data on the platform will result in more efficient and trustworthy transactions between the parties involved.

The data in the Malaysian Vehicle Blockchain will create a trusted set of records for every status change of a vehicle that will result in faster and more trustworthy transactions between manufacturers, sales showrooms, banks, insurers and second-hand car buyers.

More recently, OpenGov Asia reported that Malaysia is going to build the first blockchain-city in Asia. The Malaysian city of Malacca will be converting 835 acres into a tourist blockchain-city of the future, with support of the government of China and several major corporations.

The Melaka Straits City will be constructed on a total of 635 acres of reclaimed land, where boutique hotels and about 100 villas with a beautiful sea view and private access to the beach will be built along the coastline, while another 200 acres of the marine area will be kept for building chalets, and water recreation facilities.

The project is planned to become the first blockchain-city in Asia.

It is, therefore, clear that Malaysia is making massive strides in its adoption and application of blockchain technology and setting an example for other countries in the APAC.

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SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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