On Friday Nomura Research Institute (NRI) issued its latest digital bond on BOOSTRY‘s blockchain platform that it co-founded. While digital securities are quite popular in Japan, most of them are for tokenized real estate rather than digital bonds. One of the objectives of the latest issuance was to explore improved settlement, particularly delivery versus payment (DvP). The settlement of the Yen 3 billion ($20m) bond was executed with conventional bank money on a T+1 basis, but using DvP. Separately, there was a simulation using tokenized deposits and DCJPY.
Most conventional wholesale bonds in Japan settle via the Japan Securities Depository Center (JSDAC) which supports delivery versus payment. Given digital bonds don’t use JSDAC, to date Japanese issuances have not settled using delivery versus payment, and are therefore viewed as having greater settlement risk compared to conventional bonds.
Hence, the digital bond was issued and settled against conventional deposits in association with SMBC bank. This used T+1 DVP, which is three days faster than JSDAC for new issuances.
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