Project Ubin is a collaborative project first launched in 2016 by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS). In August 2018, MAS and SGX announced partnership with Anquan, Deloitte and Nasdaq to harness blockchain technology for settlement of tokenised assets. In order to explore the possible DvP settlement models, six blockchains of varied capabilities and features were used in prototypes. In this session, Peter from SGX will offer deeper insights into a DvP prototype developed with Deloitte that was hosted on Amazon Managed Blockchain, and will also discuss potential future applications of DLT (Distributed Ledger Technology) for capital markets, while Michael from AWS will discuss some of the common patterns seen in blockchain networks as well as features that control the privacy of data on shared blockchain networks.

1. S U M M I T
Hong Kong

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Interledger DvP Settlement on
Amazon Managed Blockchain
Peter Shen
Head of Technology Strategy and Innovation
Singapore Exchange
Michael Edge
Senior Blockchain Architect
AWS Professional Services

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Agenda
Interledger DvP settlement
Peter Shen
Privacy in shared, distributed blockchain networks
Michael Edge

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Introduction to Singapore Exchange
A diversified exchange group that runs key market infrastructure including the Singapore stock
market and a pan-Asian derivatives exchange covering all major asset classes.
Anchored in Singapore, Asia’s only triple AAA-rated economy, Singapore Exchange is a diversified
exchange group and Asia’s leading market infrastructure that includes Singapore stock market and a
pan-Asian derivatives exchange covering all major asset classes.

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SGX Global Footprint
SGX is headquartered in Singapore, with overseas offices in
Beijing, Chicago, Hong Kong, London, Mumbai, Shanghai, San Francisco, and Tokyo.

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SGX Value Chain
Clearing Business
Securities & Derivatives
Trading Business
Securities, Derivatives & Fixed Income
Depository Business
Securities - Central Depository (CDP)
Trading
Trade Matching
Market Data
Co-location
Pre-Trade Risk Controls
(Derivatives)
Post-Trade
Pre-Settlement Matching Service
(Securities)
OTC Trade Registration (Derivatives)
Facilitation Desk (Commodities)
Clearing & Settlement
OTC clearing (Derivatives)
Clearing and Settlement (Securities &
Derivatives)
Collateral Management (Securities &
Derivatives)
Securities Depository
Custody
Corporate Actions
SBL
Risk Management Systems
Corporate Systems

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End of an era through marketplace innovation
The closure of Trading Pits brought back the most memorable experiences,
the tradition of Open-Outcry trading…
Buyers and Sellers stood on steps that descend into the pit. Orders were shouted or flashed to
the trading specialist through hand gestures/signals, or delivered to the pit by runners. Each pit
specialised in a specific commodity, and was the only place to trade

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Why DLT for financial markets
Custody
Current Marketplace
Transaction
Platforms
PDF, Online Documents
Product Catalogues, Term Sheets
Rulebook
Contracts
APIsMarket Data
Reconciliation, Reporting
Operational
Processes
DLT Marketplace
Node
(Virtual Machines)
Smart Contracts
Autonomous or Supervised Execution
PostTrade
Settlement
Trading
Key Vault
(Custody of Digital Assets)

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About Project Ubin – A multiphase journey
Project Ubin is a collaborative project between the Monetary Authority of Singapore (MAS) and the industry to
explore the use of Distributed Ledger Technologies (DLT) for clearing and settlement of payments and securities.
Source: www.mas.gov.sg/Singapore-Financial-Centre/Smart-Financial-Centre/Project-Ubin.aspx
Current Phase
Delivery vs Payment
(DvP) for Domestic
Securities Settlement
Phase 1
Use of digital
currency in Real-
Time Gross
Settlement (RTGS)
Phase 2
Achieved gridlock
resolution and liquidity
savings mechanism (LSM)
on a distributed system
without compromising on
privacy
Future Phase
Delivery vs Payment vs
Payment (DvPvP) for
Cross-border settlement of
payments and securities
Current Phase
Payment vs Payment
(PvP) for
Cross-border
settlement
Trading Post Trade Clearing Settlement DepositoryCapital Raising

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Our objectives
Interconnect separate DLTs of different
characteristics and features
Mitigate counterparty risks in DvP with
recovery on cash and securities ledgers
Achieve DvP settlement finality with
clearing members
Strengthen investor confidence and
experience with safety and reliability

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And why Amazon Managed Blockchain?
Ease of creating and managing scalable business networks
Quickly create blockchain networks
that span multiple AWS accounts.
Easily add or remove members and
monitor the network
Fully managed
Choice of Hyperledger Fabric
or Ethereum (coming soon) Improves reliabilityScalable and secure
Easily scale your blockchain
network as the usage grows. Also,
Managed Blockchain secures your
network certificates with KMS
Choose the right framework for
your needs, whether you are
building a permissioned or public
network
Managed Blockchain improves the
reliability of the “ordering service,”
by replacing the default technology
with QLDB. This improves
durability.

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A business of trust
Time boundaries
Enable efficient and automated or supervised recovery of assets within predefined
time horizon
Account controls with multiple-signatures
Anchoring the role of an independent arbitrator for resolving contractual disputes
to safeguard the interests of investors
Contract locks with secure secrets
Enhanced security with blockchain-independent transfer of secrets “off-chain”
Instituting key designs for laws and regulations in the smart contracts

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Our conclusions
Higher investor confidence
Instituted designs for arbitration
Potential for
round-the-clock operations
Flexibility to compress settlement cycles1
2
3
4
5
6
Enhanced investors’ security
Multi-signature, off-chain,
out-of-band secure secrets
Broadening of asset classes
& investor types
Consistently applied
rights & obligations

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Key takeaways and future challenges
DLT holds great promise for transforming
Financial Services, unlocking opportunities and
providing greater access to capital.
Challenges around data privacy, regulatory
oversight and adoption will need to be
addressed.
Amazon Managed Blockchain enables us to focus
on building business applications, and is a
concrete step towards mainstream adoption of
DLT for financial markets.

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In blockchain networks, all members see all transactions
• Bank A transacts with Bank B
• A multi-million dollar deal to hedge
their over-exposed position
• The transaction is shared with all
other members in the network
• This behaviour is not desirable
• It is not representative of the real-
world
Exchange
Bank A
BankBank
Bank B Broker
Central Bank
Custodian
Transactions like these will never take place on a
permission-less public blockchain network with
anonymous members

19. Hey everyone, come and see
what business I’m doing!

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Four ways to keep data private in Fabric
Many blockchain networks offer the
ability to keep data private. Hyperledger
Fabric provides (at least) four ways:
1. Channels, controlled by membership
2. Encrypt data and control the keys
3. Access control in the smart contract
4. Use in-built private data collections

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Using channels for privacy
• You’ll need 1 channel per
combination of members
• Each channel/chaincode combination
results in 1 ledger
• Could result in 100s of channels,
which equates to 100s of ledgers
• In this example, a single Exchange
would need to host 100s of ledgers
• Overhead to manage chaincode if
common across channels
Exchange
Bank
BankBank
Bank Broker
Central Bank
Custodian

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Access control in smart contracts
• The smart contract can make
access control decisions based
on the caller/client
• Extract identity from the callers
certificate
• Allow/deny access to data
• Allow/deny ability to invoke TX
• Can also be used if you use your
smart contract to control access
to docs in an external store
Member 1
client
Member 1 Peer
Ledger
Smart Contract
External
Docs
Certificate

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Using private data collections for privacy
• By default, orderers see all TX data and peers
see all data on the channels they have joined
• Making data private using encryption just
moves the problem from a data protection
problem to a key management problem
• What we really want is:
• Transactions that contain a mix of sensitive
& general data
• General data is visible to all peers on the
channel
• Only certain peers see sensitive data, based
on policy
• Orderer never sees sensitive data

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Member 1
client
Member 1
Peer
Transient Data Store
State
Private State
Ledger
Member 2
Peer
Transient Data Store
State
Private State
Ledger
Member 4
Peer
Transient Data Store
State
Private State
Ledger
1
• TX Proposal
submitted to
peers
• Private data in
transient fields
2
• Simulate TX
• Store data in
transient data store
Member 3
Peer
Transient Data Store
State
Private State
Ledger
3
Create proposal
response:
• Public read/write
set
• Hash of private
data
• No private data
included
2
• Simulate TX
• Store data in
transient data store
4
Return proposal
response to client
5
Submit TX:
• Public data, private hashes, no private data
6
• Distribute block to all peers on channel
• All peers validate TX in block
• No private data in block
7
• Check if authorized to access private data
• If so, check if private data in transient data store
• If not, pull from another peer via Gossip
• Validate private data against hash in TX
• Move private
data to private
state
• Delete transient
data
8
7
• Check if authorized to access private data
• If not, do not pull data from other peers
In this example, members 1,2,3,4 share a
channel. However, only members 1,2 & 3 have
access to private data on the channel
Purge private data
after X blocks, i.e.
delete from private
state
9
Private data disseminated in 2 ways:
1. During TX endorsement
2. Via Gossip

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Summary: Four ways to keep data private in Fabric
Many blockchain networks offer the
ability to keep data private. Hyperledger
Fabric provides (at least) four ways:
1. Channels, controlled by membership
2. Encrypt data and control the keys
3. Access control in the smart contract
4. Use in-built private data collections

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Thank you!
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Peter Shen
peter.shen@sgx.com
Michael Edge
edgema@amazon.com

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