Banking heavyweight HSBC will reportedly conduct research for a blockchain solution to issue fixed income securities.
The project – which will be jointly tested with Singapore Exchange (SGX) and investment company Temasek – will primarily target Asia bond markets, via bringing enhancement to the current bond issuance process, making tokenized securities and smart contracts applications cheaper, as revealed by HSBC Singapore on November 13.
Despite the gradual incline in development of Asia’s fixed income markets, inefficiency is still a problem with the bond issuance and servicing processes, per HSBC. The main reason behind this could possibly be the lack of a single platform for the exchange of information between different partners and tracking solutions throughout the bond life.
The project will tokenized securities and smart contracts to provide supports for activities conducted between investors, bond arrangers and custodians.
Lee Beng Hong – director of the SGX fixed income department – revealed that with the participation of HSBC and Temasek in the trial, SGX would be able to run assessment on the potential of smart contracts and distributed ledger technology (DLT) becoming the solution for the issues, concerning fixed income issuance market.
“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.” Tony Cripps, CEO at HSBC Singapore, remarked.