SINGAPORE: Singapore Exchange (SGX) and Temasek announced that the digital assets joint venture (JV) –Marketnode – has partnered with Covalent Capital to build Asia Pacific’s first, end-to-end digital infrastructure in the fixed income space.
This latest development follows the JV announcement by SGX and Temasek on 22 January. As part of the partnership, Marketnode will acquire a minority stake in Covalent.
Marketnode will tap on the accelerated need to digitalise and optimise workflows to meet demand for capital in Asia, starting with fixed income (FI).
The partnership is poised to consolidate primary FI workflows as bond issuances continue to grow in Asia ex-Japan, where G3 primary issues have grown 46% to US$387 billion over the last two years, totalling more than 800 new issues in 2020 with more than 450 issuers and 200 arranger banks.
Through their partnership, Marketnode and Covalent will work together to streamline the listing, straight-through processing and settlement of bonds and activities in bond lifecycle management.
It will connect Covalent’s flagship OMAS platform, which is a data, book building and allocations tool, with SGX’s listing, post-trade and asset servicing capabilities, thereby providing the Asian bond market with a unique, one-stop listing, issuance and lifecycle management platform.
This builds upon SGX, Temasek and HSBC’s digital bond collaboration, which saw Olam International’s inaugural digital issuance in August 2020 and subsequent return with an additional S$250 million digital issuance in January 2021.
Lee Beng Hong, Senior Managing Director, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said, “We are pleased to hit the ground running with Marketnode by partnering Covalent in this effort.
Covalent is an ideal partner for us given its focus on the syndicated bond market, where there is a critical need for digitalisation to meet the needs of issuers, buy-side institutions and service providers. This is a significant step towards building an issuance-to-settlement platform that addresses all of their infrastructure needs.”
Pradyumna Agrawal, Managing Director, Blockchain@Temasek, added, “We see the transformative potential of end-to-end digital asset solutions for financial transactions.
We are excited to take the next step with this partnership between Marketnode and Covalent. Bringing together core capabilities and insights across the organisations involved will help deliver greater and more meaningful impact as we continue to digitalise and innovate across our capital markets infrastructure.”
Mr Lim Cheng Khai, Executive Director (Financial Markets Development Department) of the Monetary Authority of Singapore, said, “Digitalisation and automation will lead to higher level of efficiencies, market transparency and information availability for all industry participants including banks, investors and issuers. MAS welcomes SGX, Temasek and Covalent’s partnership to build the first end-to-end digital infrastructure supporting the digitalisation of fixed income markets in Asia.”
Sanjay Garodia, Chief Executive Officer at Covalent Capital, said, “We are really excited to take the joint product to stakeholders involved in the capital markets space from issuers and law firms to underwriters and investors. The investment by SGX and Temasek validates the need for a holistic solution to the legacy infrastructure which currently supports the burgeoning market.”