Malaysia's securities regulator is investigating how blockchain infrastructure might improve unlisted share trading. Through its Alliance for Fintech program (aFINity), the Securities Commission has i
Malaysia's securities regulator is investigating how blockchain infrastructure might improve unlisted share trading. Through its Alliance for Fintech program (aFINity), the Securities Commission has initiated a test examining whether blockchain systems could increase visibility in the traditionally secretive world of over-the-counter markets.
Speaking at the 2017 SCxSC Digital Finance Conference, SC head Tan Sri Ranjit Ajit Singh articulated the problem facing these markets. "Traditionally, the unlisted and OTC market space have been opaque due to the lack of information available," he said during his keynote. "By using a blockchain as the technology underpinning the market infrastructure, all transactions and market activities would be recorded and made available to all market participants, while still maintaining transaction confidentiality."
The pilot initiative is expected to produce an industry roadmap. This blueprint will detail the underlying technical design, essential software functionality, and implementation benchmarks that stakeholders can reference as they construct blockchain systems for unlisted and OTC trading, Ranjit explained.
The pilot leverages technology from Neuroware, specifically its Cortex platform, to facilitate unlisted secondary market activity across different blockchain networks. Neurowave, a division of R1, provides consulting and implementation services helping entities adopt and deploy blockchain technology. Their portfolio spans software frameworks, computing infrastructure, educational seminars, and programming competitions designed for both seasoned technologists and newcomers exploring blockchain.
Early implementation is underway at Ata Plus, which operates as one of Malaysia's six licensed equity crowdfunding platforms. The firm has deployed Cortex to preserve immutable, permanent records of portfolio companies, investment opportunities, and transactions. Roughly 18 months earlier, Ata Plus became Malaysia's pioneer among regulated financial institutions in operating blockchain systems at full-scale commercial levels.
Concurrently, Malaysia's regulator is updating its rules governing digital currencies and tokenized assets in its securities markets. Working alongside Bank Negara Malaysia, the central bank, the Securities Commission is designing a new regulatory approach promoting "functional and effective use cases" for digital assets, encompassing the buying and selling of recognized cryptocurrencies and comparable digital instruments. The new rules should be finalized within the coming months.
Ranjit highlighted the shifting investor landscape driving this action. "We note the growing interest of Malaysian investors in trading cryptocurrencies and digital assets," he commented. "To facilitate such activities in our market and put in place investor safeguards, we are reviewing relevant regulations and guidelines to allow functional and effective use cases of digital assets in the capital market, including the seconding market trading of established cryptocurrency and digital assets."
