The Thailand Bond Market Association announced it is adopting blockchain for bond registration and plans to tokenize bonds for faster settlement in bond trading.
Currently in Thailand, banks and securities traders act as bond registrars. Blockchain will allow these firms to see holdings in real-time and expedite the process of completing bond transactions form 15 to three days. The association said it is working on implementing the system in a sandbox enabling the Thai Securities and Exchange Commission to review it.
“It would be a hybrid kind of decentralized DLT (distributed ledger technology). There is no need for consensus but it is a rotation system,” said Thada Phutthitada, President of the Association according to the Thai Examiner.
Meanwhile, in a future second iteration of the project, scripless bonds will be tokenized so that the digital form can be used in transactions between parties. Thai Examiner said the country’s corporate bond market has seen about 1 trillion Baht ($32.66 billion) worth new bond issues this year.
The announcement comes a week after the Securities and Exchange Commission (SEC) directed the country’s regulators to incorporate blockchain in Thai capital market’s infrastructure.
SEC Secretary-General Ruenwadi Suwanamongkol said, “The SEC has initiated guidelines to use DLT as a digital infrastructure in all capital market activities. This will make the whole process in the capital market more efficient, save the cost of access or use to market participants in all sectors. It is also transparent and verifiable will benefit access to services in the capital market.”
Applying DLT in capital markets is logical as it will save time by initiating paperless transactions, automatic settlements and better integration for Know Your Customer (KYC) compliance.
Blockchain in bond markets is being tested by the World Bank which launched bond-i with Commonwealth Bank of Australia last year. Back in July, Nomura Research Institute (NRI) and Nomura Holdings announced they were jointly developing a blockchain trading platform with an initial focus on corporate bonds. Spanish bank BBVA has been one of the most active in this sector.