Blockchain-based Bond Exchange Tests In Singapore
Singapore-based BondEvalue today announced that it has been approved to enter the Monetary Authority of Singapore’s (MAS) Sandbox Express to launch a blockchain-based bond exchange.
The platform will offer a unique proposition to reduce the minimum investment amount of bonds to US$1,000 via BondbloX*.
Currently, bonds are predominantly traded over-the-counter (on the phone), which makes bond prices opaque and the process inefficient. BondEvalue uses a permissioned blockchain that allows bonds to be traded electronically, like stocks. By moving bond trading to an electronic exchange, prices become transparent and trade settlement becomes instantaneous. This is a huge improvement from the traditional process of a two-day trade settlement cycle.
“Today only about 50,000 people in Asia are able to afford wholesale bonds, due to the US$200,000 minimum investment. BondBloX will grow this number to over 25 million in the next 3-5 years,” said Rahul Banerjee, founder of BondEvalue. He added, “The bond market should not be restricted to just the affluent but rather be accessible to all, like equities.”
The platform connects to banks, wealth managers and robo-advisors across the world, allowing their customers (limited to accredited investors in Singapore) to trade BondbloX. The company will showcase the platform at the upcoming Singapore FinTech Festival (SFF) x Singapore Week of Innovation and TeCHnology (SWITCH) 2019.
Mr Sopnendu Mohanty, Chief FinTech Officer, MAS said, “The ability to gather early feedback from actual customers plays an important part in determining the success of innovation. Sandbox Express achieves this by providing a fast lane approval for innovations to be tested quickly in the market. We are delighted that it has enabled BondEvalue to jumpstart an innovative experiment to address real challenges in today’s bond market.”
BondEvalue’s bond exchange is built on Hyperledger Sawtooth – a modular platform for building, deploying and running distributed ledgers.
“Hyperledger is excited to see BondEvalue’s bond exchange platform, based on Hyperledger Sawtooth, going live. BondEvalue will be able to provide greater financial inclusion through enhanced transparency, security and efficiency that Hyperledger Sawtooth’s permissioned blockchain provides. It is a great example of how permissioned blockchain can disrupt traditional markets and offer new, interesting business models and opportunities,” said Mr. Brian Behlendorf, Executive Director, Hyperledger.
Jonathan Horan, Capital Markets Partner, Singapore, Linklaters added, “We are delighted to have had the opportunity to work with BondEvalue and MAS, on the FinTech regulatory sandbox process and BondEvalue’s digital platform. Entry into Sandbox Express marks a significant step in real-life blockchain implementation to redefine international debt capital markets while being fully compliant with extant laws.” Linklaters is the legal advisor to BondEvalue.
*BondbloX: A fraction of a conventional US$200,000 bond wherein each BondbloX has a denomination of US$1,000.
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