Blockchain PoC For Security Borrowing And Lending Announced By Malaysia’s Stock Exchange

Bursa Malaysia, the country’s stock exchange, is investigating how blockchain technology can enhance the efficiency of the securities borrowing and lending (SBL) market in the country.

Based in Kuala Lumpur, Bursa Malaysia is a fully integrated exchange, offering a wide range of exchange-related services, including trading, clearing, settlement, and depository services. The exchange also offers information services related to the Malaysian securities market.

In a press release, Bursa Malaysia said that it is conducting a proof-of-concept (POC) that explores the opportunities afforded by blockchain technology to develop greater transparency and address other operational challenges associated with the SBL market in Malaysia today. The POC has been developed in partnership with the exchange’s technology partner Forms Syntron Information (HK) Ltd, a wholly-owned subsidiary of Shenzhen Forms Syntron Information Co., Ltd.

The project involves a diverse range of SBL market participants, including Affin Hwang Investment Bank Berhad, CIMB Investment Bank Berhad, Citibank Berhad, Kumpulan Wang Persaraan (Diperbadankan) and Malacca Securities Sdn Bhd. They will aim to ramp up efficiency, speed and capacity in securities lending supply and borrowing demand (Lending Pool) using blockchain technology.

“Across different markets, empirical studies show that short selling helps provide additional liquidity and improves price efficiency,” Bursa Malaysia Chief Executive Officer Datuk Muhamad Umar. “The growth potential of Malaysia’s SBL market makes it a prime candidate where the power of blockchain technology can create a considerable impact. The collaboration also 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.”

Bursa Malaysia believes that the initiative, first of its kind in the ASEAN region, opens the possibility for the stock exchange to undertake deeper explorations in blockchain technologies to address other operational challenges prevalent to SBL activities in Malaysia and discover more opportunities to drive end-to-end functionalities such as market interest discovery, trade capture and collateral management.

“Bursa Malaysia’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,” the stock exchange said.

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