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HSBC, SGX and Temasek explore DLT for fixed income

HSBC Singapore announced a trial with Singapore Exchange (SGX) and Temasek to explore the use of distributed ledger technology (DLT) for the issuance and servicing of fixed income securities, the first such end-to-end digitisation initiative focusing on the Asia bond markets.

While Asia’s fixed income markets continue to see rapid growth, bond issuance and servicing processes remain inefficient due to the absence of a single platform for the exchange of information between multiple parties and tracking of a bond throughout its lifecycle.

The trial will make use of tokenised securities and smart contracts over a permissioned ledger to streamline these workflows and reduce process friction, lowering costs for issuers, investors, bond arrangers and custodians.

“The potential of DLT is an evolving story, and its role in overcoming inefficiencies in the fixed income market is yet to be seen," said Tony Cripps, chief executive officer at HSBC Singapore. "Only by collaborating with market participants will we fully understand its actual viability; by partnering with SGX and Temasek, we hope to explore whether digital assets could become a reality.”

“As Asia’s largest listing venue for bond issuers globally, we are excited to collaborate on a new operating model that could potentially bring cost savings to issuers, arrangers and investors," commented Lee Beng Hong, head of Fixed Income, Currencies & Commodities at SGX. "Having HSBC and Temasek on board will enable us to evaluate holistically whether smart contracts and DLT can solve some of the long-standing challenges in the fixed income issuance ecosystem.”

"Blockchain technology has great potential in transforming businesses and opening up new opportunities," added Chia Song Hwee, president and chief operating officer at Temasek. "We are pleased to partner with HSBC and SGX on this test-bed, with an eye on how the technology can potentially be applied more broadly across a range of products. Such partnerships and initiatives allow us to advance the impact of emerging technologies and better understand how economies can benefit.”

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