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Dear ,


The capital markets industry is wide and deep. Even in private markets as a subsegment, delivering real value by leveraging technology requires understanding a broad set of specific elements along the value chain and thinking deeply about how it can be done better.


Highlighting one of these elements that kept us busy recently: Delivery-versus-Payment (DvP), the process of settling a securities trade by simultaneous exchange of the ownership of rights (ie, the asset) and the stipulated payment amount between the trade partie; in more simple terms: I deliver the goods, you deliver the money, we exchange the two simultaneously.


We are working on moving our semi-automated DvP mechanism to a fully automated one via using a stablecoin on CrossPool. In the conventional/ traditional world of securities post-trade scene, DvP has reached the maturity and clarity of communication protocols, payment mechanism as well as risks management. Any digital platform is confronted with the question "How do we achieve DvP and eliminate settlement risk in the new digital world?". From a helicopter view, the topics the forerunners are tackling include fluidity of fiat currency and cryptocurrency, settlement finality, interledger interoperability and investor protection. And there has been interesting progress, for example, late 2018, MAS and SGX completed a pilot project with a consortium of financial institutions and technology partners including R3 on DvP:

Project Ubin: Central Bank Digital Money using Distributed Ledger Technology.  


What is DvP?
It is a securities industry settlement method that guarantees the transfer of securities only happens after payment has been made. It stipulates that the buyer's cash payment for securities must be made prior to or at the same time as the delivery of the security. (Investopia) 

What is a Stablecoin?
Essentially, a stablecoin is a new class of cryptocurrencies that attempts to offer price stability and are backed by a reserve asset. (Investopia)

In the next newsletter, we hope to bring you a bit more flavour on the actual operational workflows of how we're achieving the DvP using stablecoin. Stay tuned!

Get CrossPool Lightpaper. 

Interesting read/watch

(a) Quick chat with R3 at Sibos 2019

(b) As we touched on the topic of stablecoin above, let's peek into the development of CBDC (Central Bank Digital Currency). It was announced by Mu Changchun, the deputy director of PBOC payment and settlement department, that the systems needed to support the digital yuan offering are close to being out, after 5 years of research and development.  Mu's full speech content in Chinese can be read here.

(c) Co-authorship Prof Seen Meng Chew, Chinese University of Hong Kong and Dr Florian M Spiegl. They are writing a series on digital assets for Asia Asset Management.

“With the relative ease of private companies tapping private equity funds and borrowing at lower rates, they have more incentives to stay private and to avoid the cumbersome process and high costs of going public,” says Dr. Florian M Spiegl, Co-Founder and COO of FinFabrik, a Fintech company in Hong Kong.

“Some public firms have even taken the U-turn to become private again, shifting their focus from short-term quarterly results to long-term goals,” adds Dr. Spiegl, citing the case of Dell being taken private in 2013 in a US$ 24 billion transaction.


Until next time,

Your FinFabulous team.

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