Five global banks have set up a non-profit organisation in Singapore to support the development and adoption of common standards and frameworks for tokenised financial markets. HSBC, Kinexys by JPMorgan, MUFG, Societe Generale-Forge and Standard Chartered announced the Global Layer One Organisation, or GL1 Org, in a joint release on Wednesday, The Business Times reported.
GL1 Org's establishment turns GL1, an initiative spearheaded by the Monetary Authority of Singapore and global financial institutions and policymakers, into an industry-led organisation that advances the next phase of its work, according to the joint statement. It will support the continued development and adoption of GL1's frameworks, which include the GL1 Market Infrastructure Toolkit and the GL1 Programmable Compliance Toolkit.
WHAT GL1 HAS BUILT
Since its launch, GL1 has developed a framework of controls to assess whether market infrastructures are suitable and to help participants design their own. It has also developed a structured approach to embedding regulatory and policy requirements into digital financial infrastructure.
The organisation will also support efforts to facilitate connectivity across institutions, infrastructures and jurisdictions. It said it welcomes participation from financial institutions, policymakers, market infrastructure providers, fintechs and other stakeholders.
FROM A CENTRAL BANK LEDGER TO AN INDUSTRY BODY
When MAS first unveiled GL1, it intended to develop a ledger that complied with regulation, Ledger Insights reported. The goal has since shifted to creating an ecosystem of compatible and interoperable platforms around the world, developing standards rather than building a network itself. The central banks of England, France and Singapore were also involved in GL1, Ledger Insights reported.
WHAT THE BANKS SAY
"Tokenisation can help make financial markets faster, more efficient and more connected, but those benefits will only be realised if clients can trust the underlying infrastructure," said Ruby Ho, managing director and head of markets and securities services for Asean at HSBC.
Patrick Lee, chief executive for Singapore and Asean and South Asia at Standard Chartered, said tokenisation and distributed ledger technologies are foundational for the evolution of financial services. With digital financial market infrastructures emerging across public and private chain networks, policy, regulatory and market infrastructure standards are critical for interoperability and for scaling adoption globally, he said.
THE TGB VIEW
The founders' parent groups carry weight: in the TGB Bank Rankings, which rank banks by total assets, JPMorgan Chase is 5th with US$4,424.9bn, HSBC 8th, MUFG 10th, Société Générale 21st and Standard Chartered 43rd. HSBC and Standard Chartered are also two of the seven banks MAS designates as domestic systemically important in Singapore. The detail to note is who is absent: BNY and Citi, which have worked with MAS on GL1, are not among the five founders.
Related: HSBC lifts third-quarter pre-tax profit 32% to $9.6 billion and announces $1 billion buyback
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