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Introduction
1. Thank you for the kind introduction, Takashi. Congratulations to our friends at Nikkei for putting together an excellent programme today. Distinguished speakers and panellists, ladies and gentlemen – a very good afternoon to you. It is my pleasure to share my thoughts on innovation in Asia, a topic that SGX is very excited about.
Singapore’s fintech ecosystem
2. Just as how innovation is an integral part of Japanese culture, Singapore is also starting to live and breathe technology. Over the years, we have put together the building blocks of what we call a Smart Nation. This is where investments in digital infrastructure, a tech-savvy population and a single-layer government are brought together. Essentially, the idea is to empower people, and to develop people-centric solutions to address our urban challenges.
3. Singapore’s fintech journey began in 2015, when Singapore’s central bank, the MAS (Monetary Authority of Singapore), embarked on an ambitious blueprint for a Smart Financial Centre. In the space of just three years, the industry has created a true fintech ecosystem. There are now common standards and interoperable infrastructures. The government and the financial industry have an ongoing collaboration known as Project Ubin, which has attracted the interest of central bankers from Canada to South Africa. The Singapore Fintech Festival, which is one of the largest fintech events in the world[1], has become the go-to event for ideas and opportunities.
Fintech and investments
4. Here in Southeast Asia, a vibrant startup ecosystem is emerging. The region has produced 10 unicorns since 2012, and fintech is set to remain the focus of investors through 2019[2].
5. Singapore is one of the largest producers of startups in Southeast Asia. In the financial industry, some of the notable examples in the capital markets space include Covalent Capital’s platform for the primary debt capital markets – which is a one-stop shop for the lifecycle of a new bond deal, from mandate from the borrower and roadshows, to pricing the transaction and allocation of the issue to investors.
6. Another example is SGX’s partnership with homegrown M-DAQ to launch the world’s first multi-denomination automated quotation prototype. M-DAQ’s patented solution allows investors to view, track and trade securities in multiple currencies, within a single liquidity pool. These are specific niches, and complement Singapore’s position as a global financial hub.
7. SGX is indeed an integral part of this fintech ecosystem. Our position as a neutral and trusted market infrastructure has given us a unique opportunity to take the lead on some of Singapore’s fintech initiatives. Technology is an enabler and our approach is always tied to real-world adoption. We believe technology should complement, rather than merely disrupt.
Digital Marketplace for Capital
8. In fintech, a lot of the focus has been in the payments space. For example, open banking, where consumers can interact with both traditional and non-traditional service providers. For SGX, we see an opportunity to create a “Digital Marketplace for Capital.”
9. How do we define such a Digital Marketplace? We envision a seamless connection and exchange of capital and data – powered by technology, and supported by human relationships and robust regulation.
- At its heart is the customer. In today’s borderless world, investors want free flow of information between trading platforms and intermediaries, enhancing their access to products and services.
- Data would be a key component, to help investors make better-informed decisions in trading and risk management.
- And underpinning all of this in the marketplace is trust – robust regulations and infrastructures, along with enhanced cybersecurity.
10. We at the exchange have started on this journey to become a Digital Marketplace for Capital.
11. We are advancing the mobility of financial capital across borders by investing and collaborating with the industry – from equities to currencies to commodities. The goal is a robust marketplace that will attract natural participation and interaction, which in turn generates a positive multiplier effect. With technology, exchanges like ourselves can link and build liquidity pools across multiple venues and trading protocols, enhance transparency and price discovery, and develop a broader universe of global participants.
12. Together with the MAS, we announced the successful completion of the third phase of Project Ubin, known as Delivery-versus-Payment. SGX developed unique methods that simplified post-trade processes and shortened settlement cycles – demonstrating the real-world value of DLT, or Distributed Ledger Technology. Following the project’s completion, we applied for our first-ever technology patent.
13. Apart from DLT, we are working in the areas of artificial intelligence (AI) and data science. We have a centralised machine-learning server that helps us accelerate our AI and machine-learning capabilities. Already, we are using data analytics and AI to automate processes. We have started to apply this technology to our fixed income trading platform to enhance workflows. We hope to continue to analyse and engineer the data we have, to enhance customer products and services.
14. We are also collaborating with Stanford University on self-programming networks (SPN). SPN uses AI to enable a network to sense and control its environment, and that is very applicable to exchanges, where we manage large amounts of data. This has the potential to transform capital markets by re-imagining the way networks are organised, benefitting market participants. It is still early days for some of these projects, but we are excited by the possibilities.
15. Last but not least, trust. We offer a resilient, safe and trusted platform for global transactions.
Closing
16. While the industry is not there yet, a true Digital Marketplace for Capital is a vision we can all work towards. Just as Singapore’s Smart Nation initiative is about people rather than devices, fintech should not be just about finance or technology. Indeed, it should encompass the best of customer focus, data application and trust.
17. I leave you with these thoughts for the future and look forward to your questions.
[1] http://www.mas.gov.sg/News-and-Publications/Speeches-and-Monetary-Policy-Statements/Speeches/2018/Singapore-FinTech.aspx
[2] https://www.bain.com/insights/investing-in-southeast-asia-whats-behind-the-boom/
