Today Singapore Exchange (SGX) announced its first bond issue using a blockchain platform. The bond from agribusiness Olam International was issued in parallel to the conventional S$400 million ($295m) 5.5-year syndicated public bond and S$100 million tap. HSBC provided its on-chain settlement solution and sovereign wealth fund Temasek also participated in the platform development. The plans for the solution were announced ten months ago.
This is part of SGX’s digital asset platform for issuance, servicing and it acts as a depositary. Digital Asset’s DAML smart contract language was used to program the debt issuance workflow.
“Debt capital markets globally are characterised by deeply engrained legacy systems and processes which can be made faster, more accurate and efficient with this new technology,” said Lee Being Hong, Senior MD at SGX. “We look forward to playing a part in strengthening the fixed income market infrastructure of Singapore, Asia’s fixed income hub for bond issuers.”
According to SGX, the benefits include removing settlement risk, speeding up the process from five days to two, including ISIN identifier issuance. Plus, the coupon and redemption payments are automated as well as the provision of registration functionality.
“The bond market is one of the last bastions of risk, holding on to paper and manual processes,” said Yuval Rooz, Co-founder and CEO, Digital Asset. “Despite the growth in electronic bond trading, there are still many aspects that require manual intervention.”
And it’s for that reason that bond issuance is one of the more popular enterprise blockchain applications. In Japan, Nomura and SBI are working on BOOSTRY for bond issuance. And MUFG leads the Security Token Research Consortium which also has its eye on bonds.
Recently both the Philippines and Thailand announced government bonds that use blockchain.
Numerous startups are also focusing on bonds, including LedgerEdge from the founder of enterprise blockchain firm R3, MonetaGo, Bond180 and Agora.