Singapore Exchange Completes First Digital Bond with Temasek and HSBC Using Smart Contracts
(4 September 2020 – Singapore) HSBC, Singapore Exchange (SGX) and Temasek have successfully completed their first digital bond issuance, which is also the first in Asia.
The 5.5-year corporate bond worth US$294 million (S$400 million) was issued by Olam International, one of the world's largest coffee bean, rice and cotton suppliers.
It 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.
An on-chain payments solution from HSBC was also used to facilitate settlement in multiple currencies, as well as to transfer funds to Olam International.
Key efficiencies observed within the pilot include timely ISIN (identifier) generation, elimination of settlement risk (for 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.
"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," said Olam managing director and chief financial officer (CFO) N. Muthukumar.
"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," said SGX.
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