Singapore Substitute (SGX), working together with HSBC Singapore and Temasek, has performed its first digital bond issuance on SGX’s digital asset issuance, depository, and servicing platform, efficiently replicating a S$400 million 5.5-twelve months public bond disaster and a observe-on S$100 million faucet of the identical disaster by Olam International.
An Asia first for a syndicated public corporate bond, this digital bond marks every other milestone in SGX’s employ of digital asset technology, by streamlining processes for issuers, underwriters, investors, and ecosystem contributors across predominant issuance and asset servicing. SGX utilised DAML, the orderly contract language created by Digital Asset, to model the bond and its disbursed workflows for issuance and asset servicing over the bond’s lifecycle.
SGX’s solution makes employ of orderly contracts to desire the rights and duties of parties angry by issuance and asset servicing, corresponding to arrangers, depository brokers, correct counsel and custodians. The digital bond outmoded HSBC’s on-chain payments solution which permits for seamless settlement in a pair of currencies to facilitate switch of proceeds between the issuer, arranger and investor custodians.
Key efficiencies seen interior the pilot include smartly timed ISIN (identifier) generation, elimination of settlement chance (for issuer, arranger and investors), reduction in predominant issuance settlement (from 5 days to 2 days) as smartly as automation of coupon and redemption payments and registrar functionality.
Constructing on this digital issuance, SGX will work with issuers, arrangers, custodian banks and investors to digitalise bond issuance, depository and asset servicing, step by step rising the mounted earnings ecosystem.
Lee Beng Hong, Senior Managing Director, Head of Mounted Profits, Currencies and Commodities (FICC), SGX, mentioned, “We are very angry that this collaboration with HSBC and Temasek has ended in the successful completion of the most predominant digital syndicated public corporate bond in Asia. Debt capital markets globally are characterised by deeply engrained legacy systems and processes which may perchance maybe even even be made sooner, extra obedient and atmosphere capable with this new technology. DLT and orderly contracts are rapid evolving technologies, and our vision is to utterly digitalise the reside-to-reside corporate bond issuance and asset servicing process. We reside up for taking half in a half in strengthening the mounted earnings market infrastructure of Singapore, Asia’s mounted earnings hub for bond issuers.”
David Koh, Head of Global Liquidity and Money Management, HSBC Singapore, mentioned, “We’re proud to be working closely with SGX and Temasek to force sooner, extra clear, and fully valid settlements for bond issuers and investors. This first digital bond issuance for Olam International reveals how our on-chain solution can fulfil payment desires in DLT-essentially essentially based ecosystems, and demonstrates our deserve to form and participate in the following generation of asset networks, to greater provider our securities products and companies purchasers. We reside up for bringing this technology to our purchasers in Singapore and beyond.”
Chia Song Hwee, Deputy Chief Govt Officer at Temasek, added, “Modern technologies corresponding to blockchain technology are key enablers that can transform processes and systems to plot sport-altering opportunities. We are satisfied to absorb partnered SGX, HSBC and Olam on this initiative. The successful bond issuance validates the functionality for issuances of other assets and merchandise, and marks a needed milestone towards bettering financial processes and workflows.”
N Muthukumar, Managing Director and Neighborhood CFO of Olam International, mentioned, “Olam is happy to pilot Asia’s first digital bond in conclude partnership with SGX, Temasek and HSBC. Going digital will get the total process extra atmosphere capable and clear for all parties – issuers like us receive our funds extra rapidly, investors get their bonds extra fast while the arrangers, custodian and banks revenue from the diminished likelihood of error and tempo. Here is essentially essentially based on Olam’s targeted push into digitalisation as half of our refreshed strategy, to develop sustainably and reside our purpose of reimagining world agriculture and meals systems.”
“The bond market is and not utilizing a doubt one of many rest bastions of chance, preserving on to paper and manual processes,” mentioned Yuval Rooz, Co-founder and CEO, Digital Asset. “Despite the growth in digital bond trading, there are aloof many parts that require manual intervention. SGX’s DAML orderly contract solution solves a serious anxiousness point market contributors absorb been working to repair for years. We reside up for our persisted work with SGX as they pass to digitise the reside-to-reside bond issuance process.”