Singapore Exchange uses blockchain to issue $300m digital bond

Published at: Sept. 4, 2020

Singapore Exchange (SGX), a major investment holding company in Singapore, has issued its first digital bond powered by blockchain technology.

As officially announced on Sept. 1, SGX deployed its digital asset issuance platform to conduct a 400 million Singapore dollar ($294 million) 5.5-year public bond issuance for major local food and agri-business company, Olam International. 

Focused on Asia bond markets, the new digital bond was enabled by cooperation with SGX’s established blockchain partners like HSBC Singapore and investment firm Temasek. As part of the joint initiative, HSBC provided its on-chain payments solution allowing instant settlement in multiple currencies to handle proceeds between the issuer, arranger and investor custodian.

In order to issue the bond, SGX implemented DAML, a major smart contact language developed by American blockchain startup Digital Asset.

As SGX’s digital asset issuance platform is based on smart contracts, DAML enabled the company to model the bond and its distributed workflows for issuance and asset servicing over the bond’s lifecycle. Smart contracts enable the platform to capture the rights and obligations of parties involved in issuance and asset servicing, including arrangers, depository agents, legal counsel and custodians.

According to SGX, the latest pilot of the new blockchain-enabled platform demonstrated major efficiencies like the elimination of settlement risks and reduction of settlement time from five days to two days.

The latest bond pilot comes after SGX partnered with HSBC Singapore and Temasek to explore the use of DLT for bond issuance in November 2019.

A number of companies around the world are trying to implement blockchain tech to bring more benefits to the global bond market. In July 2020, the Philippine Bureau of the Treasury launched a blockchain application for distributing government-issued treasury bonds. Authorities in South Korea and Thailand are also exploring the potential benefits of blockchain in the bond market.

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Blockchain
Asia
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Smart Contracts
Banks
Bonds
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