Bursa Malaysia Berhad (“Bursa Malaysia” or “the Exchange”) embarks on a securities borrowing and lending (“SBL”) Proof-of-Concept (“POC”) – a first of its kind in the ASEAN, 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 project aims to ramp up efficiency, speed and capacity in securities lending supply and borrowing demand (“Lending Pool”).
Developed in partnership with the Exchange’s technology partner Forms Syntron Information (HK) Ltd (“FORMS”), a wholly-owned subsidiary of Shenzhen Stock Exchange-listed Shenzhen Forms Syntron Information Co., Ltd., the POC will involve a diverse range of SBL market participants.
Affin Hwang Investment Bank Berhad, CIMB Investment Bank Berhad, Citibank Berhad, Kumpulan Wang Persaraan (Diperbadankan) and Malacca Securities Sdn Bhd. are collaborating with Bursa Malaysia and FORMS to drive the development of the blockchain-enabled Lending Pool to suit the industry’s specific needs, cost and efficiency pressures.
Bursa Malaysia Chief Executive Officer, Datuk Muhamad Umar Swift said, “Across different markets, empirical studies show that short selling helps provide additional liquidity and improves price efficiency. 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.”
This initiative is the first POC project designed to explore and address challenges faced in SBL in Malaysia. It also opens the possibility for Bursa Malaysia 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.
More than creating powerful information systems, digital technologies such as blockchain bring about a fundamental shift in how the market works, thinks and hires. 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.
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”.