HSBC, the Singapore Exchange, and Temasek will test the use of distributed ledger technology (DLT) to improve issuance and fixed income securities in Asia. HSBC said in a statement that the technology is the first end-to-end digitisation initiative focused on Asia’s bond markets.
The distributed ledger technology trial by HSBC and Temasek will use tokenised securities and smart contracts to streamline workflows and address challenges, the local media reported.
DLT used by HSBC can digitally record transaction of assets and their details in multiple places at the same time. The technology has no central administrator or centralised data storage.
HSBC Singapore Chief Executive Tony Cripps told the media that, “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 the Singapore Exchange and Temasek, we hope to explore whether digital assets could become a reality.”
HSBC in a statement said that bond issuance and financial servicing processes lack a single platform for information exchange between parties.
In September, overseas investors were net buyers of Asian bonds, which received a combined net flow of $2.13 billion. The inflow was 19 percent higher than August. The data was extracted from regional banks and bond market associations in Indonesia, Malaysia, Thailand, South Korea and India.
South Korea bonds attracted $1.18 billion, while Malaysian bonds attracted $217 million in inflows. That said, Thai and Indian bonds had $518 million and $145 million in outflows, the Indian media reported.