Bursa Malaysia, Digital Asset and VMware Blockchain to develop dematerialization proof-of-concept

By Leandra Monteiro

Bursa Malaysia Berhad, embarked on a Dematerialisation Proof-of-Concept to facilitate the dematerialisation of securities certificates leveraging Daml smart contracts from Digital Asset and a highly scalable distributed ledger platform from VMware. The project aims to test blockchain-powered technologies’ efficiency and operational feasibility in the issuance of dematerialised securities certificates, with initial emphasis on Structured Warrants.

Bursa Malaysia estimates this initiative could improve the ease of doing business by reducing the reliance on manual work to create, manage and withdraw Structured Warrant certificates.

“The dematerialisation of Structured Warrants through a robust and automated distributed ledger technology, will contribute to a more transparent, secure, economical, and most importantly, effective marketplace for all,” said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia. “Today’s significant collaboration with Digital Asset and VMware is the continuation of our larger goal of exploring transformative technologies for the Exchange and achieving full dematerialisation for all of its physical securities.”

“Malaysia has grown into an important financial hub in Southeast Asia,” said Yuval Rooz, Co- Founder and Chief Executive Officer at Digital Asset. “With trading volumes growing and digital transformation initiatives taking shape, the time has come for Bursa Malaysia to transition to a fully paperless environment. We are thrilled to be leading the dematerialisation proof-of-concept with Bursa Malaysia in collaboration with VMware Blockchain. This is a critical smart contract initiative that has the potential to transform the Malaysian securities industry.”

“As Bursa delivers transformational enhancements across Malaysia’s financial market ecosystem, VMware is excited to be the chosen distributed ledger technology partner to help realise these goals,” said Brendon Howe, Vice President and General Manager, Blockchain, VMware. “VMware has a proven 10-year history in supporting Bursa Malaysia’s critical technology platforms. VMware Blockchain provides Bursa with an enterprise-grade, scalable and performant DLT platform combined, as well as the industry leading support and integration capabilities required for critical financial market infrastructure workloads.”

The blockchain-powered proof-of-concept will aid in the simplification of Structured Warrants issuances. It provides a centralised source of truth to increase transparency, improve data quality, and reduce potential disruptions in physical transportation and in- person delivery throughout the eligibility life cycle. In addition, the proof-of-concept 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.

This initial phase of the proof-of-concept will bring together industry collaborators ― Macquarie Capital Securities (Malaysia) Sdn Bhd and Maybank Investment Bank Berhad ― to test an electronic term sheet capability. The proof-of-concept will also look into improving efficiency on downstream processes such as electronic scrip registration and recording.