In its first major venture abroad, homegrown fintech firm iSTOX has signed a Memorandum of Understanding (MOU) with the Chongqing Monetary Authority, which manages monetary matters in the Chinese city.
With Chongqing - with a population of 30 million - being one of China’s fastest growing cities with GDP the size of Norway’s, the agreement marks a giant leap for the SGX-backed fintech firm’s ambitions to expand its business in China.
“China is the world’s fastest growing private capital market and Chinese investments have been an important enabler of economic growth, world-class companies and higher living standards – both globally and in China,” says iSTOX co-founder Darius Liu. He believes that the firm would be able to help Chinese firms access international capital by issuing digital securities to fund their expansion and diversify their investments geographically.
As a major economic powerhouse in China’s western region, Chongqing was a logical choice of partner for the nascent fintech firm. It is only one of four mainland cities that report directly to the Chinese central government given its economic importance.
Chongqing has close economic ties with Singapore, working with the city-state on joint initiatives like the Chongqing Connectivity Initiative (CCI), which aims to boost regional connectivity under China’s Belt and Road Initiative in areas like finance, trade, transport and logistics.
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The MOU was signed as part of the Third China-Singapore Financial Summit, witnessed by Chongqing Mayor Tang Liangzhi and MAS Managing Director Ravi Menon. The stated aim of the agreement is to bring innovative financial products to Chongqing and attract technology companies to the city by providing an international platform for raising funds.
Under the MOU, Chongqing Monetary has pledged to set up an iSTOX digital securities exchange in the city to serve the Chinese market. Moreover, both parties have pledged to collaborate on establishing a broader “Chongqing-Singapore Financial Services Hub”. The authority has pledged to “play a coordinating and advocacy role on matters that require approval by China’s national financial regulatory agencies”.
Developing the hub will likely involve a potential tie-up between iSTOX and two state-owned investment companies under the Chongqing Municipal Government.
The first is the Chongqing Development Investment Co Ltd, which makes investments in strategic infrastructure and development projects on behalf of the city. The second is the Chongqing Share Transfer Center, which was formed to develop the city’s private capital market.
“With today’s agreement, the Chinese authorities are signalling their confidence in the regulated cutting-edge technology that underpins our digital securities platform,” Liu remarks.
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The deal represents a significant milestone in iSTOX’s journey as a firm, having graduated from the Monetary Authority of Singapore’s (MAS) Fintech Regulatory Sandbox in February 2020. It is now a fully-regulated provider of issuance, custody, and secondary trading of digitised securities through its multi-asset digitised securities investment platform.
iSTOX uses blockchain, digitised securities and smart contracts to democratise private capital markets. Its backers include Singapore Exchange (SGX) and Temasek Holdings subsidiary Heliconia Capital Management.
But this landmark MOU is only the beginning of iSTOX’s ambition to take the fintech world by storm. Liu has vowed that this first foray into overseas expansion would not be the last for his nascent fintech business.
“In a digital age, investments across borders should be seamless. Regulated platforms like iSTOX will work with governments and regulators everywhere to build the safe and efficient infrastructure needed for capital to flow freely between countries,” he resolves.
