The Philippine Dealing System Holdings Corp. (PDS Group) announced the launch of a fully digitally native bond, issued on a distributed ledger technology (DLT) network powered by Hashstacs (STACS), a Singapore-headquartered fintech firm.
The digital bond was issued by the Union Bank of the Philippines for PHP 11.00 billion or approximately US$ 210 million and priced at 3.25% p.a. for a tenor of 1.5 years.
PDS Group subsidiary Phil. Depository & Trust Corp. (PDTC), the national Central Securities Depository for debt and equities, and STACS embarked on the project, a proof of concept to explore, use, and determine efficiencies of DLT for PDTC’s fixed income registry and depository operations.
The aim was to deploy a viable DLT-powered PDTC Digital Registry & PDTC Digital Depository system to support issuances and servicing (transfers and corporate actions) of a Philippine digital bond and culminating in the live issuance of a digitally native bond.
Through the partnership, PDTC and STACS were able to effectively model and optimise the workflows involved, unlocking new efficiencies and strategic opportunities.
The new digital processes remain completely seamless for the underwriters, issuers, and bondholders with a paperless submission of issuing documents for listing and registry via the PDS Group’s e-Securities Issue Portal (e-SIP) to create securities onto the PDTC Digital Registry, powered by STACS.
These benefits were achieved, while being compliant with the existing Philippine securities laws and regulations, as well as the rules of the Phil. Dealing & Exchange Corp. (PDEx) another PDS Group subsidiary that is a Philippine SEC-licensed fixed income market operator.
The UnionBank issued Digital Bond is listed on the PDEx FI Market and secondary market transactions will occur on existing market infrastructure for trading to clearing and a newly built link from the clearing system to the PDTC Digital Depository to complete Delivery Versus Payment settlement.
The project’s feature of interoperability was planned to allow PDEx Trading Participants and PDTC Depository Participants to seamlessly reap the benefits of the new digital market infrastructure while being supported by traditional market infrastructure and compliant with the regulatory framework.
Future phases of the partnership include further engagement with the industry, in view of possibly scaling up PDS Group’s platform with more features, including ESG management via holistic ESG data as well as smart contracts to automate the lifecycle management of sustainable financial products.
Ramon Monzon, CEO at of the group’s parent company, PDS Holdings said,
“In engaging in this POC, the focus on seamless inter-operability of digital with traditional infrastructure and the digital services’ compliance with existing securities laws and regulations foster an evolutionary approach.
In that regard, we are pleased to have a like-minded partner in STACS, also looking to use technology to fulfil a vision of corporate issuers and client investors mutually benefiting from the convenience of digitalized funding and investment processes.”
Benjamin Soh, Managing Director at STACS said,
“We are thrilled to be partnering with the Philippines PDS Group and powering the first national market infrastructure in Asia to launch a fully live DLT-based bond, via our DLT expertise.
Technology like DLT provides immutability and ease of access by different users, allowing the benefits to be reaped across borders on an international scale, by PDS and its wider ecosystem of financial institution partners, creating vast value and opportunities for the industry.”
