The Singapore Exchange (SGX), a large Singapore-based holding company, has issued the first digital blockchain-backed bond.
As officially announced on September 1, SGX has extended its digital issuance platform to issue S $ 400 million ($ 294 million) public bonds for Olam International.
With a focus on Asian bond markets, new digital bonds are being activated through collaborations with established blockchain partners at SGX such as HSBC Singapore and Investment Corporation Temasek. As part of a joint initiative, HSBC has unveiled a cross-chain payment solution that allows instant settlements in multiple currencies to manage revenue between the issuer, regulator and investor custodian.
For the bond issue, SGX has implemented DAML, an important intelligent communication language developed by the new US digital assets on the blockchain.
Because SGX’s digital asset issuance platform is based on smart contracts, DAML has enabled the company to develop bonds and distributed workflows and service assets throughout the bond’s lifecycle. Smart contracts allow the platform to capture the rights and obligations of the parties involved in the release and operation of assets, including regulators, custodians, legal advisers and trustees.
According to SGX, the latest beta version of the new platform that supports blockchain has shown significant efficiencies, such as eliminating settlement risk and reducing settlement time from five to two days.
The latest beta test of the bond came after SGX partnered with HSBC Singapore and Temasek to investigate the use of DLT for a November 2019 bond issue.
A number of companies around the world are trying to implement blockchain technology to provide more benefits to the global bond market. In July 2020, the tax office of the Philippines launched a blockchain application for distributing government bonds. The South Korean and Thai authorities are also exploring the potential benefits of blockchain in the bond market.