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MAS spins digital exchange HGX out of its sandbox

Its business model is to rely on members to source deals and investors, says CEO Willie Chang.



Willie Chang, HGX

HGX, a virtual-assets exchange, has graduated from the fintech sandbox of the Monetary Authority of Singapore. Its goal is to play in the emerging trend of tokenization as a licensed institution.

HGX accepts non-blockchain private asset listings as well, although its primary focus will be on digital assets transacted via blockchain.

The business model attempts to attract members, who in turn will source deals and investors, rather than for HGX to do this directly, says WIllie Chang, CEO.

HGX has a market operator license and is positioned to run a private market for accredited investors. “With the MAS license, all limits are off,” Chang said. “We can trade any approved product and accept any volumes.”


The company has four shareholders, of which three are members, that is, licensed financial firms.

Prime Partners Corporate Finance is a boutique investment bank that specializes in helping small local companies list on Catalist, the second board of SGX.

Phillip Capital is a large domestic broker.

Fundnel is a Singaporean fintech that runs a platform to give investors access to private-market assets.

Zilliqa Research is a blockchain company and protocol that has recently been involved in issuing non-fungible tokens.

HGX is using the Zilliqa blockchain. Chang says it has the public, permissionless features of Ethereum, but it operates much faster and at lower transaction costs.

Ethereum is in a multi-year transition to “Ethereum 2.0” to address these issues, including a technical method called sharding, in which transactions are minted and validated by batching nodes (servers on the network) instead of each node having to perform every single transaction.

Zilliqa introduced sharding when its mainnet went live in 2019, bypassing some of the problems that Ethereum is trying to solve.

Product proliferation

Chang says HGX’s first products have been security tokens giving ownership to whisky, reflecting Fundnel’s access to alternative investments. Wine and physical artworks are in the pipeline.

But Chang acknowledges some ambivalence about this start: “Whisky casks have brought us momentum, but I want HGX to be known as a broad marketplace, not a niche platform.”

HGX also plans to list tokens representing economic interest in stocks of well-known, privately traded tech names such as Grab and Goto. Chang says a token representing an ESG fund is also in the works.

These efforts reflect similar efforts among other digital-asset exchanges looking to sponsor regulated securities tokens, not least DBS Digital Exchange, as well as other Singaporean platforms such as ADDX (formerly known as iSTOX) and CapBridge’s OneExchange.

What Chang says sets HGX apart is its membership model, which is based on how traditional stock exchanges operate, with licensed broker-dealers buying seats and trading on behalf of their customers. An individual can’t trade directly on NYSE, but she can through her brokerage account.

In contrast, several digital-asset exchanges are launching as end-to-end businesses that do their own marketing and pitch asset owners to tokenize with them, as well as attempting to create a secondary market. HGX has the same needs but it is relying on its members to do this, rather than the platform’s management.

Thus, it expects Prime Partners to bring its coterie of SME clients which are considering a Catalist listing, and either aren’t ready for a traditional IPO or would like a dual listing; on Fundnel for creating equities-like exposure to public stocks; and Phillip for kickstarting a secondary market.

Chang says monthly volumes now average $500,000 worth of trades per month. He hopes to hit monthly volumes of $1 million, although he didn’t provide a timeline, or explain what that amounts to in terms of turnover value. This depends on adding members, growing the eligible investor base, and adding more products – as well as ensuring Zilliqa’s technology layer is seamless, fast, and secure.

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