CIMB Group, through CIMB Islamic Bank Berhad, has completed a pilot to test the settlement of tokenized sukuk using tokenized deposits in a controlled environment.
The pilot was conducted in relation to a MYR 1.68 billion ($420 million) issuance under CIMB Islamic Bank Berhad’s existing MYR 10 billion Senior Sukuk Wakalah Program, with tenors ranging from five to 15 years, CIMB said in a statement on Thursday.
Of the total issuance, MYR 1.38 billion was represented in tokenized form and subscribed by 12 institutional investors, while the remaining MYR 300 million was issued as traditional sukuk.
In simple terms, tokenization allows a conventional financial asset such as a sukuk to be represented digitally using distributed ledger technology.
When paired with tokenized deposits, which represent commercial bank money digitally, it has the potential to enable greater automation and more integrated settlement of financial transactions.
This could ultimately reduce settlement delays, improve liquidity management and make the movement of funds more efficient.
The pilot was undertaken as part of CIMB’s participation in Bank Negara Malaysia’s (BNM) Digital Asset Innovation Hub (DAIH), which provides a controlled environment for financial institutions to test new digital asset applications.
CIMB has also been engaging with the Securities Commission Malaysia (SC) on the development of tokenized capital market products. The tokenization layer does not alter the underlying economic or Shariah structure of the sukuk.
Amir Hamzah Azizan, Minister of Finance II, said the pilot demonstrated how Malaysia could build on its established strengths in Islamic finance and capital markets as financial infrastructure becomes increasingly digital.
“Malaysia has developed deep capabilities in both Islamic finance and the capital markets. The next step is to ensure that these strengths continue to evolve alongside changes in technology and the way financial transactions are conducted,” he said.
He also said this pilot is important because it moves tokenization beyond theory and tests how digital financial assets and commercial bank money can work together in a controlled environment.
“The objective is not digitalisation for its own sake, but to explore whether technology can make financial markets more efficient, transparent and connected while preserving strong standards of governance, investor protection and Shariah compliance,
“Close collaboration between regulators and the private sector will remain important as we develop these capabilities responsibly and determine where they can create genuine value for Malaysia’s financial system,” he added.
Novan Amirudin, Group Chief Executive Officer of CIMB Group, said the pilot provided CIMB and regulators with practical insights into the operational, legal and regulatory requirements involved in tokenised financial transactions.
According to him, this pilot allows the firm to test how tokenized financial assets can operate alongside existing market infrastructure and, importantly, how tokenized deposits can be used for settlement.
“The potential benefits are practical. Greater automation and faster settlement could reduce friction in financial transactions, improve liquidity management and increase capital efficiency,
“The experience gained from this pilot will help us assess how these capabilities can be developed further in Malaysia and, potentially, across regional and cross-border applications,” he added.
According to the statement, the pilot brings together capabilities across Islamic finance, capital markets, transaction banking, technology, legal documentation, custody and settlement, together with regulatory, rating and Shariah considerations.
The issuance and settlement activities conducted under the pilot will also provide insights into how a tokenized instrument could subsequently support lifecycle events such as coupon distribution, secondary-market transfers and redemption.
The initiative forms part of CIMB’s efforts to develop its capabilities in digital financial assets and explore practical applications of tokenized deposits and distributed ledger technology in financial and capital markets, said the statement.
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