HSBC will explore the use of blockchain for issuing fixed income securities in a joint trial with Singapore Exchange (SGX) and investment firm Temasek.
On Nov. 12 HSBC Singapore announced that the aim of the trial is to reduce cost by applying tokenized securities and smart contracts in a proper well-organized bond issuance process.
HSBCSG announces a trial with SGX and Temasek to explore #DLT for fixed income. Tony Cripps, CEO, HSBCSG – “The potential of DLT is an evolving story…only by collaborating with market participants will we fully understand its actual viability.” Read more: https://t.co/ziosvMLww8 pic.twitter.com/2MOamfpjam — HSBC Singapore (@HSBC_SG) November 13, 2019
HSBC says that even though the fixed income markets of Asia continues to grow, issuing bonds and the services associated with it remains to be inefficient.
This is due to the absence of a single platform for the exchange of information between multiple parties and tracking tools throughout the life of the bond.
Joint Trial To Employ Smart Contracts And DLT
The new trail will involve tokenized securities and smart contracts with blockchain-powered execution agreements between a number of parties such as investors, custodians, bond arrangers.
Lee Beng Hong, the head of the fixed income department at SGX, noted that having HSBC and Temasek in the trial will allow the firm to assess whether smart contracts and distributed ledger technology can fix some of the challenges of the fixed income issuance market. Tony Cripps, CEO at HSBC Singapore, said:
“The potential of DLT is an evolving story, and its role in overcoming inefficiencies in the fixed income market is yet to be seen. Only by collaborating with market participants will we fully understand its actual viability; by partnering with SGX and Temasek, we hope to explore whether digital assets could become a reality.”
"The potential of DLT is an evolving story. Its role in overcoming inefficiencies in the fixed income market is yet to be seen. By partnering with @SGX & @Temasek, we hope to explore whether digital assets could become a reality." – Tony Cripps, HSBCSG CEO https://t.co/7DdylHS8qo — HSBC Singapore (@HSBC_SG) November 14, 2019
All three participants of the new Asia-focused bond market trial have already been experimenting with blockchain technology.
Source: HSBC Singapore | Image: Retail News Asia