Last year Singapore startup BondEvalue announced a collaboration with Northern Trust to develop a blockchain-based bond marketplace. Yesterday saw the first transaction, a transfer of an $8,000 interest in a tokenized bond from agribusiness Olam. The tokenized bonds are referred to as BondbloX.
A key aim is to enable a wider distribution of bonds that are usually sold in high denominations. By enabling fractional ownership of as little as $1,000, BondEvalue hopes to attract so-called HENRYs, high earners not rich yet, as investors.
“We believe BondbloX will be an industry game changer. Our vision is to have over 25 million people in Asia invest in bonds in the next five years, from 500,000 individuals currently,” said BondEvalue’s Founder and CEO, Rahul Banerjee. “This is no small ambition but we are hopeful as we have seen millions of people, forced by Covid-19 lockdowns, going online in the last six months for their everyday transactions.”
Justin Chapman, global head of Market Advocacy & Innovation Research at Northern Trust, commented that digital assets can improve trust and liquidity. He said: “An additional benefit of fractionalised ownership of digital assets is the ability to open up institutional bond markets to more investor types – this is a positive step forward for broadening financial inclusion.”
Northern Trust has the role of designated custodian, and at launch, BondEvalue also partnered with Singapore’s largest brokerage UOB Kay Hian and Taurus Wealth Advisors is the first exchange member.
How it works
The BondbloX (BBX) are depositary receipts, although they are unsponsored, so the company that issues the bonds (in this case, Olam) is not a participant. We believe that the conventional bond will be custodied by Northern Trust, which will keep tabs to ensure an equivalent value in BondbloX, but we didn’t receive confirmation in time for publication.
The blockchain being used is Hyperledger Sawtooth.
BondEvalue is a participant in the Monetary Authority of Singapore (MAS) sandbox and hopes to match the criteria to exit the sandbox in the near future. Sopnendu Mohanty, Chief FinTech Officer at MAS congratulated the company on the launch.
BBX charges a Singapore $2 flat fee per trade and an annual platform fee of 20 basis points. Partners are free to add their own commissions. This seemed to appeal to Taurus Wealth Advisors, whose CEO Mandeep Nalwa said: “It is wonderful to see this complete price transparency in the bond market for the first time.”
Tokenized bonds becoming a busy space
Meanwhile, interest in blockchain bonds is escalating in both the public and private sectors. In the last month or so, the Philippines and Thailand have either released or announced government bonds being issued to retail investors. In the private sector, Japanese firm SBI recently invested in the Nomura blockchain bond venture BOOSTRY . And the CEO of enterprise blockchain firm R3, Dave Rutter, has launched a new corporate bond venture, LedgerEdge .