THE Singapore Exchange (SGX) and Temasek Holdings holdings subsidiary Heliconia Capital Management have invested in iSTOX, a capital markets platform by blockchain-based infrastructure company ICHX Tech.
The platform designed by ICHX Tech - a company incubated by Singapore investment firm ICH Group - aims to provide fast time-to-issuance and a high level of transparency for users. But, while iSTOX incorporates blockchain and smart contract technology in its platform infrastructure, it is not a cryptocurrency exchange as all issuances will be bought and sold using fiat currency.
With the investment, Chew Sutat, SGX's executive vice-president and head of equities and fixed income, and Chua Kim Leng, former special adviser (financial supervision) and assistant managing director at the Monetary Authority of Singapore (MAS), were appointed to the startup's board.
ICHX Tech is working towards being regulated and licensed by the MAS as a recognised market operator, and the iSTOX platform will go live once the requisite MAS licences have been obtained, the parties said in a joint statement on Thursday.
In the statement, the parties added: "As a next-generation capital markets platform, iSTOX will be well-positioned at the forefront of a new era for capital fundraising through the use of security token offerings (STOs)."
STOs are financial securities that offer flexible issuance structures and can be backed by a variety of underlying assets, which include company shares or debt, among others. Through iSTOX, investors can also gain STO access to liquidity through a secondary trading platform.
Said Danny Toe, chief executive officer of ICHX Tech: "iSTOX presents a more flexible, inclusive and efficient platform that we believe will greatly benefit both companies looking to raise capital and investors seeking bespoke investment opportunities. In this way, we aim to offer a future-ready platform for capital fundraising which offers substantial benefits to complement existing capital market mechanisms."
SGX's Mr Chew said: "As capital markets evolve, companies will seek new funding avenues that suit their different stages of growth and business needs. To advance Singapore's position as a world-class financial hub, we need innovative solutions that push boundaries and set new benchmarks. We believe this new platform by iSTOX will add to the vibrancy of Singapore's capital market ecosystem, providing more options for issuers and investors alike."
Heliconia Capital Management's chief executive officer Derek Lau commented: "We see iSTOX as a potential disruptor in the traditional capital markets. As an small and medium enterprise (SME) enabler, Heliconia is excited to support iSTOX in its journey to create the next-generation regulated capital markets platform."
He added: "More interestingly, we now have the chance to provide SMEs the alternative to capital raising and market liquidity by moving beyond traditional securities exchanges."