The Filipino branch of UnionBank and Standard Chartered, have joined forces to launch a distributed ledger technology (DLT) based bond issuance platform. The system has successfully been used to tokenize and issue PHP 9 billion ($190 million) worth of bonds, according to reports on December 7, 2020.
Bonds on the Blockchain
In a bid to make it possible for retail investors to purchase bonds in a fast and frictionless manner, Union Bank of the Philippines and Standard Chartered Ventures, two top financial institutions in the region, have developed and completed a blockchain proof of concept for a retail bond issuance platform.
Per sources close to the development, the unnamed platform was successfully used to conduct a proof of concept for the tokenization of PHP 9 billion worth of bonds issued by Union Bank.
Thanks to blockchain technology, the team has made it clear that the entire bond issuance process, including account verification, was without any form of paperwork, and on top of that, there was no need for third-party interference.
Commenting on the innovative project, Aaron Gwak, Head of Capital Markets at Standard Chartered ASEAN reiterated that the new system effectively eliminates the bottlenecks associated with traditional bond infrastructure and lowers the barrier to entry.
In his words:
“The bond infrastructure around the world has been designed primarily for institutional investors and involves a number of intermediaries to buy and subsequently trade bonds, making it less accessible to retail investors. To an average investor, providing direct access to issuers is crucial to allowing them to reap the full benefits of their investment.”
Blockchain Bond Issuance Gaining Popularity
While blockchain technology is best known as the foundation behind bitcoin () and a vast array of decentralized digital currencies, the revolutionary technology is increasingly being used for a vast array of purposes in the traditional finance world and other sectors of the global economy.
Last February, the Bank of Korea (BOK) revealed plans to develop a blockchain-based bond issuance platform that will facilitate seamless bond issuance and trading. And earlier in June 2020, Thailand’s Public Debt Management Office (PDMO) sold cheap bonds to Thai residents via Krung Thai Bank’s blockchain platform.