London-based technology firm Nivaura is working with Singapore’s DBS Bank on a blockchain-based bond platform with the power to deliver “one-click issuance,” the companies said Monday.
It’s a good match: Nivaura has gone deep when it comes to tokenizing securities, working closely with partners like the London Stock Exchange Group (LSEG). DBS, with the support of the Monetary Authority of Singapore (MAS), is a leader when it comes to institutional involvement in cryptocurrency and digital assets.
In the early days of blockchain explorations, evangelists for the tech questioned the need for infrastructure such as central securities depositories (CSDs) as a decentralized future came into focus.
Nivaura has since taken the view that it’s not about replacing things like CSDs, but rather about how to automate securitization work flows, with the option to plug into any clearing system – that could be Clearstream or Ethereum.
“The problem that we’re solving for is not blockchain, it’s a transaction orchestration problem,” Nivaura founder Avtar Sehra said in an interview, adding:
“You could have a Santander platform interacting with JPMorgan or Citibank or DBS, etc. How do we make sure all the parties can communicate and take the workflow to the next level and create a tokenized asset?”
Traditional marketplaces, where everybody is on the same platform, communicating and executing, means all participants are tied to a central counperparty’s processes and rules, said Sehra.
Another approach is where every bank or dealer connects via APIs to everyone else, but this can be inefficient and costly. Nivaura’s third way is a hybrid of a hub-and-spoke and an API approach.
“You do a single API connection into a decentralized network like Ethereum, a public network. In that single API connection, you can share a smart contract with anyone, essentially like DeFi,” said Sehra.
While Ethereum has been the home of much of Nivaura’s work thus far, Sehra said other blockchains have piqued his interest, such as Polkadot and Diem (formerly Libra).
Nivaura has worked with a group of global law firms to create the General Legal Mark-Up Language (GLML) so lawyers with zero software programming experience can set up documents for digitization and automation.
In addition to its work with DBS, the London-based fintech firm is launching the open source GLML Foundation to mature the template for automating tokenized securities.
“The time is ripe for traditional ways of bond origination to make way for a more digital approach, to do what has been aspired for so long – by taking the first step towards the creation of an independent platform that allows bond issuers efficient and effective direct access to the market place and bond investors,” DBS Global Head of Fixed Income Clifford Lee said in a statement.
(June 28, 09.28 UTC: updates DBS quote)