Singapore’s HBSC To Launch Bond Registry Pilot Using DLT; Partnering With Temasek And SGX
One of the largest banks in the world is delving into the decentralized ledger technologies (DLT) space to offer fixed income securities on the blockchain. Singapore’s HSBC announced a partnership with Singapore Exchange (SGX), a leading exchange in debt and fixed income assets, and Temasek, a company with a net portfolio value of $231 billion USD, to launch a bond issuance platform on DLT in Asian markets.
HSBC partners with SGX and Temasek Investments
The Asian bond market is witnessing absurd growth in the past year or so as investors look towards non-volatile investments. According to the Asian bond monitor index, at the end of June, there was $15.3 trillion in local currency bonds outstanding in the region, 3.5% more than at the end of March and 14.2% more than in June 2018. While the space experiences high growth, the service, and infrastructure remain inefficient rendering the process slow and expensive.
In a turn to innovation, HSBC will launch a pilot project applying smart contracts and tokenized securities to streamline the bond industry. Chief Executive Officer at HSBC Singapore, Tony Cripps, is looking forward to the use of blockchain to explore possible digital bond contracts. In the partnership with SGX and Temasek, he 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.”
Adding to the comments, Lee Beng Hong, Head of Fixed Income, Currencies & Commodities at SGX, said,
“Having HSBC and Temasek on board will enable us to evaluate holistically whether smart contracts and DLT can solve some of the long-standing challenges in the fixed income issuance ecosystem.”
HSBC Deeply Rooted on Blockchain Technologies
In June, the bank sent out a letter to its customers educating them on blockchain and cryptocurrencies, a move that signaled better things to come. Since then the company has integrated blockchain to reduce transaction times by over 40% and became the first bank to complete the first yuan-denominated letter of credit transaction on the blockchain.
In October, the Malaysian subsidiary, HSBC Malaysia, sent its first-ever letter of credit across the border to Singapore cutting transaction times by 90 percent.