Blockchain Technology Hits the Fixed Income Markets

From accounting procedures to shipping logistics, blockchain technology is already making its way into various sectors as part of the wave of technological disruption happening in all corners of the globe. Known as the underlying technology that powers cryptocurrencies, blockchain is separating itself as its own force to be reckoned with.

The technology is already being praised for its uses in keeping confidential data secure and as more uses for blockchain develop, it may just become standard fare. HSBC Singapore is already using the technology for fixed income security usage.

Per a HSBC press release below:

HSBC Singapore announced a trial with Singapore Exchange (“SGX”) and Temasek to explore the use of distributed ledger technology (“DLT”) for the issuance and servicing of fixed income securities, the first such end-to-end digitalization initiative focusing on the Asia bond markets.

While Asia’s fixed income markets continue to see rapid growth, bond issuance and servicing processes remain inefficient due to the absence of a single platform for the exchange of information between multiple parties and tracking of a bond throughout its lifecycle.

The trial will make use of tokenized securities and smart contracts over a permissioned ledger to streamline these workflows and reduce process friction, lowering costs for issuers, investors, bond arrangers and custodians.

Tony Cripps, Chief Executive Officer 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.”

Lee Beng Hong, Head of Fixed Income, Currencies & Commodities at SGX, said: “As Asia’s largest listing venue for bond issuers globally, we are excited to collaborate on a new operating model that could potentially bring cost savings to issuers, arrangers and investors. 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.”

Chia Song Hwee, President & Chief Operating Officer at Temasek, said: “Blockchain technology has great potential in transforming businesses and opening up new opportunities. We are pleased to partner with HSBC and SGX on this test-bed, with an eye on how the technology can potentially be applied more broadly across a range of products. Such partnerships and initiatives allow us to advance the impact of emerging technologies and better understand how economies can benefit.”

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