The Singapore Stock Exchange (SGX), a large investment company in Singapore, has issued its first digital bond using blockchain technology.
As officially announced on September 1st, SGX implemented its digital asset issuance platform to issue a 5.5-year Singapore government bond worth $ 400 million ($ 294 million) for large local food and agribusiness company Olam International.
The new digital bond, with a focus on the Asian bond markets, was made possible through collaboration with SGX’s established blockchain partners such as HSBC Singapore and the investment firm Temasek. C.As part of the joint initiative, HSBC made its on-chain payment solution available, which enables immediate billing in multiple currencies in order to manage the proceeds between the issuer, organizer and investor.
SGX implemented DAML to issue the bond, an important intelligent contract language developed by Digital Asset, an American blockchain startup.
Because SGX’s digital asset issuance platform is based on smart contracts, DAML enabled the company to model the bond and its distributed asset issuance and maintenance workflows throughout the bond’s lifecycle. Smart contracts enable the platform to capture the rights and obligations of the parties involved in the issuance and servicing of assets, including organizers, custodians, legal advisors and custodians.
According to SGX, the latest pilot of the new blockchain-enabled platform showed significant efficiency gains such as the elimination of settlement risks and the reduction of settlement times from five days to two days.
The latest bond pilot comes after SGX worked with HSBC Singapore and Temasek in November 2019 to investigate the use of DLT to issue bonds.
Various companies around the world are trying to implement blockchain technology to bring more benefits to the global bond market. In July 2020, the Philippine tax office launched a blockchain application for the distribution of government bonds. Authorities in South Korea and Thailand are also investigating the potential benefits of blockchain in the bond market.