Blockchain has garnered significant attention for its potential to revolutionise capital markets by enhancing transparency, reducing settlement times, and broadening access to financial products. Marketnode, under the leadership of CEO Rehan Ahmed, is at the forefront of these efforts.

Founded in 2021 as a joint venture between the Singapore Exchange (SGX) and Singapore’s national investment company, Temasek, Marketnode aims to modernise capital market infrastructure by leveraging distributed ledger technology (DLT). Despite the technology's transformative potential, regulatory challenges, operational inertia, and the slow pace of adoption remain obstacles.

Marketnode’s solution to settlement delays
Singapore’s assets under management reached SGD 5.4 trillion (about $4.1 trillion) with 1,250 registered and licensed fund management companies in Singapore, as of December 2023.

At the heart of Marketnode’s offering is Fundnode, a blockchain-based platform designed to tackle inefficiencies in asset settlement, particularly within Singapore’s funds market.

Currently, settlement cycles for some funds in Singapore can extend up to T+10, limiting market liquidity and responsiveness. Ahmed highlighted the urgency for change, "In the traditional setup, the settlement process can be slow and cumbersome, especially with different parties needing to reconcile records at various stages. Blockchain offers a unified, common data source that eliminates much of this manual intervention."

Fundnode has already demonstrated its ability to reduce settlement times, bringing them down from T+7 to T+2. This represents a significant efficiency gain for the Singapore market. However, scaling Fundnode across borders presents more complex challenges. "Different jurisdictions have their own regulatory environments and infrastructures, which require tailored approaches for blockchain solutions," Ahmed explained. Marketnode’s broader ambition is to position Fundnode as a flexible model that can be adapted to fit the regulatory needs of various financial markets globally.

Ahmed sees Fundnode as a cornerstone of Marketnode’s vision to build a neutral, market-agnostic infrastructure. Such infrastructure would allow different markets to embrace blockchain while adhering to local regulations. By reducing the friction in cross-border settlements and providing an infrastructure that can adapt to diverse requirements, Marketnode aims to establish itself as a key player in transforming global capital markets.

Series A funding and future growth plans
In 2024, Marketnode announced the successful first close of its Series A investment round led by HSBC. This investment provides Marketnode with the resources needed to scale operations and expand its platforms across the Asia-Pacific region. "This Series A round is more than just funding; it is a validation of our vision for blockchain in capital markets," Ahmed said.

In addition to HSBC’s involvement, the funding round has attracted attention from major financial players, indicating a growing belief in the transformative potential of blockchain-powered financial infrastructure. The capital will be used to scale Marketnode’s platforms across more asset classes, expand its geographical presence, and build the necessary operational capabilities to support widespread blockchain adoption.

Ahmed hinted at future growth, "We are preparing for the second close of its Series A investment round in the fourth quarter of 2024. This will allow us to bring in new strategic partners, not just for their capital, but for their operational expertise and ability to help scale our platforms globally."

This focus on operational expertise highlights Marketnode’s understanding that blockchain technology alone is not enough; it needs to be implemented alongside deep knowledge of market operations and regulatory requirements in different regions.

Tackling cross-border payment friction
Another critical initiative for Marketnode is its potential collaboration with Partior, a blockchain-based cross-border payments platform founded by DBS Bank, JP Morgan, and Temasek. Cross-border payments are often fraught with delays due to jurisdictional differences, regulatory complexities, and operational frictions. Ahmed mentioned, 'We are looking for programmable cash, and Partior is a likely candidate for partnership. Unless cash becomes digital, you only get half the advantage. We are looking into how delivery versus payment for digital and tokenised assets can be enabled in the future." He also highlighted that enabling delivery versus payment (DvP) — the simultaneous exchange of assets and payments — will be crucial for the adoption of digital or tokenised assets in future capital markets, ensuring more secure and efficient transactions.

Despite these challenges, Ahmed believes that digital cash’s ability to enable instant settlement in cross-border transactions is a critical development in the evolution of global capital markets infrastructure.

Tokenisation opens new doors for investors
Beyond settlement and payments, Marketnode is actively working on building a neutral market infrastructure to allow efficient access to data across asset classes. Tokenisation refers to the process of converting physical or financial assets into digital tokens that can be traded on blockchain platforms. "High-value financial products, like structured notes, have traditionally been reserved for high-net-worth investors due to the large minimum investment sizes," Ahmed explained. "By fractionalising these products, we can open them up to a much wider pool of investors."

BlackRock has made significant strides in this area, launching BUIDL, its first tokenised fund. This fund offers institutional investors exposure to US dollar yields through blockchain technology, making it a flagship example of tokenisation's success in traditional financial markets. Ahmad pointed to this as an example of the growing traction for tokenised assets.

In 2023, Marketnode tokenised a digital structured note issued by HSBC and distributed by UOB. While this was an important step, Ahmed acknowledged that significant challenges remain: "We are still in the early stages of building trust in tokenised assets. Investors need assurance that these digital products meet the same security and regulatory standards as traditional financial instruments."

Germany has also emerged as a leading market for digital structured products. Structured notes are popular among retail investors, especially in markets like Germany, where local regulations have supported the adoption of blockchain-based assets. This traction in Germany offers a glimpse of what could be possible in other regions as regulations catch up. Ahmed sees this as a model for the future growth of digital asset adoption in capital markets.

Ahmed believes tokenisation has the potential to reshape capital markets by providing broader access to investment opportunities. However, he also stressed the importance of regulatory compliance and security in driving the adoption of tokenised assets. "The regulatory landscape is evolving, but we need to ensure that as we innovate, we maintain the highest levels of security and transparency for investors," he said.

Integrating blockchain into global capital markets
Ahmed’s future vision is for Marketnode to play a key role in the hybrid ecosystem that requires the migration of asset formats. "Blockchain offers issuers flexibility in choosing between traditional, digital, or hybrid formats, which is crucial in a fast-evolving market," Ahmed said. He envisions a future where market-neutral infrastructure becomes the new financial paradigm, where issuers have a choice between hybrid asset formats.

Crucially, Ahmed emphasises the importance of building a neutral, market-agnostic infrastructure that can support blockchain-based settlements, payments, and issuances across multiple asset classes and regions. "Our goal is to create an infrastructure that is adaptable, secure, and compliant with global regulatory standards," he explained. This adaptability is key to Marketnode’s strategy of scaling blockchain adoption across different markets.

Marketnode’s possible partnerships with institutions like HSBC and platforms like Partior are part of a broader strategy to integrate blockchain into every facet of capital markets. Ahmed sees these collaborations as critical steps in laying the groundwork for blockchain’s future role in the global financial ecosystem.

Cautious optimism amid challenges
While Ahmed is optimistic about blockchain’s potential to transform capital markets, he remains realistic about the challenges ahead. Initiatives like Fundnode, Partior, and Marketnode’s tokenisation efforts showcase the technology’s capabilities, but significant regulatory and operational hurdles remain. "We are excited about the possibilities," Ahmed said, "but we know it will take time to achieve widespread adoption. Regulatory approval, operational inertia, and market readiness are all challenges that need to be addressed."

For now, Marketnode remains focused on expanding its platforms, forging strategic partnerships, and navigating the complex regulatory landscape. By doing so, Ahmed hopes to create a more efficient, transparent, and accessible capital market for all participants, laying the foundation for blockchain to become an integral part of global capital markets infrastructure.