Bursa Malaysia Successfully Completes Dematerialization PoC with VMware Blockchain and Digital Asset

Bursa Malaysia — one of the largest bourses (stock exchanges) in the Association of Southeast Asian Nations (ASEAN) — announced on December 13th the successful completion of a Proof-of-Concept (PoC) to demonstrate the dematerialization of certificates using distributed ledger technology (DLT). The PoC utilized VMware Blockchain (VMBC) as the DLT platform and Digital Asset’s Daml as the smart contract language.

DLT underpinning capital-market securities dematerialization

The goal of the project was to evaluate the potential of DLT to transform a dematerialized deposit process and explore its potential benefits to the securities ecosystem in the Malaysian capital market. This PoC, using structured warrants as a test case, was the first for the exchange for its core equity business.

Benefits of DLT in dematerialization

The dematerialization PoC successfully demonstrated that by adopting smart contracts running on a blockchain network, multiple parties can share standardized, automated business processes. Blockchain provides a centralized source of truth to increase transparency, improve data quality, and reduce potential disruptions in physical transportation and in-person delivery throughout the eligibility lifecycle. In addition, it employs electronic vaulting technology for data storage and transportation, as well as an e-signature method for digital-certificates execution, resulting in improved structured-warrants eligibility and issuance processing.

“With digital innovation rapidly reshaping the global capital markets landscape, it is pivotal for us to widen our knowledge and readiness in pursuing transformative technologies to offer efficient solutions for our marketplace,” said Datuk Muhamad Umar Swift, Chief Executive of Bursa Malaysia. “We are encouraged by the results of the dematerialization proof-of-concept, which resulted in a more efficient and a lower-risk process. This is a crucial milestone in Bursa Malaysia’s assessment of next-generation technologies for the exchange.”

Early industry collaborators joining the DLT transformation

Industry collaborators ― Macquarie Capital Securities (Malaysia) Sdn Bhd and Maybank Investment Bank Berhad ― came together for the PoC to test an electronic term-sheet capability. The PoC also aimed to improve efficiency on downstream processes, such as electronic script registration and recording.

Beyond structured warrants

Currently, the exchange is performing an assessment to further explore the potential of DLT on projects with greater complexities than structured warrants and for other business processes in the securities markets.  

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