back Back

SGX, HSBC and Temasek complete pilot digital bond for Olam International

By Edil Corneille

September 02, 2020

  • HSBC
  • Sgx
  • Singapore
Share

Singapore Exchange, SGXSingapore Exchange (SGX), working together with HSBC Singapore and Temasek, completed its first digital bond issuance on SGX’s digital asset issuance, depository, and servicing platform, replicating a S$400 million 5.5-year public bond issue and a follow-on S$100 million tap of the same issue by Olam International. Said to be an Asia first for a syndicated public corporate bond, this digital bond marks another milestone in SGX’s use of digital asset technology, by streamlining processes for issuers, underwriters, investors, and ecosystem participants across primary issuance and asset servicing.

Lee Beng Hong, Senior Managing Director, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said, “…Debt capital markets globally are characterised by deeply engrained legacy systems and processes which can be made faster, more accurate and efficient with this new technology. DLT and smart contracts are rapidly evolving technologies, and our vision is to fully digitalise the end-to-end corporate bond issuance and asset servicing process…”

SGX utilised DAML, the smart contract language created by Digital Asset, to model the bond and its distributed workflows for issuance and asset servicing over the bond’s lifecycle. SGX’s solution uses smart contracts to capture the rights and obligations of parties involved in issuance and asset servicing, such as arrangers, depository agents, legal counsel, and custodians.

“The bond market is one of the last bastions of risk, holding on to paper and manual processes,” said Yuval Rooz, Co-founder and CEO, Digital Asset. “Despite the growth in electronic bond trading, there are still many aspects that require manual intervention. SGX’s DAML smart contract solution solves a major pain point market participants have been working to fix for years…”

The digital bond used HSBC’s on-chain payments solution which allows for seamless settlement in multiple currencies to facilitate the transfer of proceeds between the issuer, arranger, and investor custodian.

David Koh, Head of Global Liquidity and Cash Management, HSBC Singapore, said, “…This first digital bond issuance for Olam International shows how our on-chain solution can fulfil payment needs in DLT-based ecosystems, and demonstrates our desire to shape and participate in the next generation of asset networks, to better service our securities services clients…”

Key efficiencies observed within the pilot include timely ISIN (identifier) generation, elimination of settlement risk (for the issuer, arranger, and investors), reduction in primary issuance settlement (from 5 days to 2 days) as well as automation of coupon and redemption payments and registrar functionality.

Chia Song Hwee, Deputy Chief Executive Officer at Temasek, added, “Innovative technologies such as blockchain technology are key enablers that can transform processes and systems to create game-changing opportunities…The successful bond issuance validates the potential for issuances of other assets and products, and marks an important milestone towards improving financial processes and workflows.”

Building on this digital issuance, SGX will work with issuers, arrangers, custodian banks, and investors to digitalise bond issuance, depository, and asset servicing, progressively growing the fixed income ecosystem.

N Muthukumar, Managing Director and Group CFO of Olam International, said, “…Going digital will make the entire process more efficient and transparent for all parties – issuers like us receive our funds more speedily, investors get their bonds more quickly while the arrangers, custodian and banks benefit from the reduced probability of error and speed. This is in line with Olam’s focused push into digitalisation as part of our refreshed strategy, to grow sustainably and live our purpose of re-imagining global agriculture and food systems.”

Previous Article

September 02, 2020

Voice-powered payments at the pump “Alexa, Pay for Gas” goes Live

Read More
Next Article

September 02, 2020

Apex and Calypso to offer middle and back-office services to Ardent Financial

Read More








IBSi Daily News Analysis

March 22, 2024

HSBC

Industry experts stress modernization, sustainability, and AI as cornerstones for future of corporate banking, Finastra study shows

Read More

IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related News

March 28, 2024

5 Major FinTech Acquisitions announced in March 2024

Read More

March 28, 2024

Tempo France suspends classical remittances, to focus on DeFi

Read More

March 28, 2024

Sindhuja Microcredit secures $14.5m in Series C Funding round

Read More

Related Reports

Sales League Table Report 2023
Know More
Global Digital Banking Vendor & Landscape Report Q4 2023
Know More
Wealth Management & Private Banking Systems Report Q4 2023
Know More
IBSi Spectrum Report: Supply Chain Finance Platforms Q4 2023
Know More
Treasury & Capital Markets Systems Report Q4 2023
Know More

IBSi Sales League Table

The industry acknowledged barometer of global banking technology vendor performance!
Get your copy now!
close-link
Get your copy now! IBSi Sales League Table 2023