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Euromoney, December 2010

DBS plans to launch its own digital exchange, thought to be the first to be built and owned by a leading bank.

Singapore Exchange (SGX), which runs the country’s stock exchange, will hold a 10% stake in the venture and will work with it on developing its liquidity and scale.

“We are, to the best of my knowledge, the first bank in the world to put together an integrated offering in the tokenized asset space,” said Piyush Gupta, chief executive of DBS, at the launch.

The new venture, called DBS Digital Exchange, will have three components to it. One is a regulated platform for the issuance and trading of digital tokens backed by financial assets that are not already found on public markets, such as shares in unlisted companies, bonds and private equity funds.

The second is a cryptocurrency trading exchange that will allow for spot exchanges from fiat currencies to cryptocurrencies and vice versa. The exchange will start out with four cryptocurrencies (Bitcoin, Bitcoin Cash, Ether and Ripple’s XRP) and four fiat currencies (Singapore dollar, US dollar, Hong Kong dollar and yen).

The third is a digital custody solution housed within DBS Bank itself, designed to bring security to one of the more problematic areas of the cryptocurrency world to date, namely the safe storage of cryptoassets beyond the reach of hackers.

The Monetary Authority of Singapore has given in-principle approval for DBS Digital Exchange to be a Recognized Market Operator, which means that it can operate organized markets for assets such as shares, bonds and private equity funds.

The three components: “Round out the complete set of infrastructure you need to be a meaningful player in the space,” said Gupta. “While there have been a lot of players and exchanges around for some years, they all tend to lack the possibility that being part of a banking group can bring to this activity.”

Specifically, he said banks’ experience in origination from their capital markets businesses and distribution from their wealth and institutional arms, plus their long-standing expertise in custody, can contribute in a way “which other bespoke exchanges find difficult to do.”

Private capital

While DBS’s willingness to embrace any kind of digital or technological disruption is well known, the new venture has been partly prompted by a change in the way companies raise capital in southeast Asia and beyond. “Everybody knows the private capital markets are growing exponentially, and more and more companies would rather stay private,” said Gupta.

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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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