The Japan Exchange Group (JPX), which operates the Tokyo Stock Exchange, will issue a corporate green bond as a security token using the BOOSTRY blockchain platform. Nomura is the structuring agent and underwriter, and Hitachi will monitor the carbon emissions prevented by renewable energy generation activities.
Nomura and Nomura Research Institute started working on a blockchain bond solution in 2019, incorporating BOOSTRY later that year. SBI bought a 10% stake in 2020. The company open-sourced its ‘ibet’ software solution for bonds.
JPX plans to have a public security token offering (STO), which JPX claims is the first digital green bond for wholesale trading in Japan.
The bonds will be issued on the ‘Ibet for Fin’ network, a consortium network founded by BOOSTRY, Nomura Securities, SMBC Nikko Securities and SBI Securities. The network acts as the bond registry, which means the Japan Securities Depository Center will not be used as the central security depository (CSD).
Data regarding the CO2 emission reductions will also be logged on the blockchain. This lays the groundwork for a future in which a bond interest rate might vary depending on whether the bond reaches a sustainability target.
Hitachi will automatically measure the volume of electricity generated at the renewable plants which receive the funds and convert this to CO2 emission reduction measurements. These readings are accessible to investors at any time, in contrast to the conventional annual reports.
The funds raised will be allocated to biomass and solar power generation.
JPX has been ramping up its digital activities of late. Last year it announced the planned April 2022 launch of an innovation subsidiary, JPX Market Innovation & Research, which is participating in this green bond initiative. Earlier this month, as part of its medium term strategy, it said it planned to launch a digital securities market for security tokens by April 2025. In February, it mentioned it was exploring green bonds and, the same month, invested in Digital Asset Markets, which has been involved in the issuance of gold-backed tokens with Mitsui.
The news also signals yet another stock exchange win for Digital Asset, as Boostry’s smart contracts use the DAML language. Other stock exchanges using DAML include ASX, HKEX, Deutsche Boerse, and Boerse Malaysia.