Digital Assets: Singapore Exchange Firsts – Issues Digital Bond; Launches Crypto Indices

September 2, 2020 | Digital Assets, News

SGX collaborated with HSBC and Temasek for its first digital bond issuance.

The Singapore Exchange’s (SGX) digital asset issuance, depository, and servicing platform announced Tuesday the successful pilot of its first digital bond. It’s 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 (SGX: O32). (Mondovisione)

The SGX said the digital syndicated public corporate bond issue marked the first step towards the issue of smart contracts and distributed ledger technology (DLT) for the Asian bond market.

Bonds – Digital firsts

  • SGX used smart contracts to codify the rights and obligations of parties involved in the issuance and asset servicing
  • For this purpose, it used DAML, the smart contract language created by Digital Asset
  • It used HSBC’s on-chain payments solution to facilitate the transfer of proceeds between the issuer, arranger, and investor custodian.

Key benefits

The use of digital technology by SGX for bond issuance will eventually streamline the process for issuers, underwriters, investors, and ecosystem participants. The efficiency payoffs are:

  • Elimination of settlement risk
  • Reduction in issuance tenure from 5 days to 2 days
  • Timely generation of ISIN
  • Automation of coupon and redemption payments
  • Automation of registrar functionality

Lee Beng Hong, Senior Managing Director, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said: “Debt capital markets globally are characterized by deeply engrained legacy systems and processes that 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 digitalize the end-to-end corporate bond issuance and asset servicing process. We look forward to playing a part in strengthening the fixed income market infrastructure of Singapore, Asia’s fixed income hub for bond issuers.”

In an announcement the same day, the SGX also made another digital splash. It said it will launch crypto indices on the exchange.

SGX to launch bitcoin and Ethereum indices

The exchange announced it is collaborating with UK-based cryptocurrency market data provider CryptoCompare, to launch crypto indices under its SGX iEdge index suite.

The first such indices will be the iEdge Bitcoin Index and iEdge Ethereum Index and mark the SGX Index Edge’s entry into the digital currency asset class.

SGX Index offers a wide array of indices for its clients covering thematic investing, smart beta, futures, fixed income, and multi-asset solutions. Crypto indices now are the latest addition.

The step to list crypto indices by SGX will boost institutional participation in the digital assets market.

According to Coin Telegraph, Singapore firms could use the SGX price feeds to launch BTC or ETH products and a way to track the price fluctuations of the crypto assets in real-time from a trusted source.

Related Story:  Singapore-based Digital Exchange Launches Its First IEO in 2020

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