StanChart, UnionBank complete Philippines blockchain-enabled bond issuance

Mon, Dec 07, 2020 – 3:12 PM

STANDARD Chartered (StanChart) and the Union Bank of the Philippines (UnionBank) have completed a proof of concept for the issuance of a retail bond on a digital platform leveraging blockchain technology for bond tokenisation.

The three and 5.25-year dual issuance totalling nine billion pesos (S$249.8 million) was mirrored on a platform co-created by UnionBank and SC Ventures, the innovation and ventures arm of StanChart, the bank said in a press statement on Monday.

Orders received were tokenised and stayed within existing retail bond guidelines. The tokens issued mirrored the traditional transaction but were not allocated directly to investors, StanChart said. SC Ventures built the bond tokenisation platform.

The Philippines’ Securities and Exchange Commission commissioner Ephyro Luis Amatong said the results of the parallel run could provide a measure of the efficiency and effectiveness of tokenisation and use of distributed ledger technology. However, such a program would need approval by the commission before full implementation, he said.

Aaron Gwak, StanChart’s head of capital markets, Asean, said: “The bond infrastructure around the world has been designed primarily for institutional investors and involves a number of intermediaries to buy and subsequently trade bonds, making it less accessible to retail investors.”

To an average investor, providing direct access to issuers is critical in allowing them to reap the full benefits of their investment, he added.

Jose Emmanuel Hilado, UnionBank’s executive vice-president and chief finance officer, said: “The marriage of a digital order-taking platform and backend infrastructure driven by tokens is the future of retail bonds. We are keen to see the day when investors can buy and sell bonds, even on the secondary markets at a click of a button on their phones.”

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