UnionBank and StanChart Pilots Blockchain Bond Issuance of PHP 9 Billionby Fintech News Philippines December 8, 2020
UnionBank has partnered Standard Chartered Bank (SCB) to successfully complete a proof of concept (POC) for the issuance of a retail bond on a digital platform leveraging blockchain technology for bond tokenisation.
The 3 and 5.25-year dual tranche issuance totaling PHP 9 billion by UnionBank was successfully mirrored on the platform co-created by UnionBank and SC Ventures, the innovation and ventures arm of Standard Chartered.
Orders received were tokenised, and to stay within existing retail bond guidelines, tokens issued mirrored the traditional transaction but were not allocated directly to investors. SC Ventures built the bond tokenisation platform making the process simpler, faster and widely accessible.
The success of this POC will open up a host of possibilities around solving for liquidity and transparency in the retail bond markets.
“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.
This POC begins the journey of the democratisation of bonds as an investment destination which supports the UN Sustainable Development Goals of the United Nations.”
said Jose Emmanuel Hilado, Executive Vice President and Chief Finance Officer of UnionBank.
“We co-created the solution with UnionBank with the aim of providing retail investors with a trusted and transparent platform to gain direct access to bonds. Today marks a milestone as we shape the retail bond infrastructure of tomorrow,”
said Alex Manson of SC Ventures.
The Online Bond Reservation portal of UnionBank where the bonds were made available is said to be the Philippines’ first digitally enabled platform allowing clients to view and place order reservations for corporate bond offerings conveniently anytime and anywhere.
Through the portal, UnionBank clients experience a fully digital end-to-end service, from account verification, client suitability assessment and the filling up of the application to purchase form, up to allocation to the investor.
The portal also makes the purchase of bonds completely paperless and more efficient as it cuts the processing time for customers from a couple of days to mere minutes.
Commissioner Ephyro Luis Amatong from the Securities and Exchange Commission added that the results of the parallel run could provide a measure of the efficiency and effectiveness of tokenisation and use of distributed ledger technology (DLT), but he was quick to clarify that such a programme would need approval by the commission before full implementation.
The POC with Standard Chartered follows UnionBank’s other recent initiatives on blockchain enabled bonds issuances, particularly the launch of Bonds.PH, a platform for retail treasury bonds done in collaboration with the Philippine Bureau of the Treasury and Philippine Digital Asset Exchange (PDAX).