Singapore’s BondEvalue Launches Blockchain-Based Bond Exchangeby Company Announcement August 14, 2020
Singapore fintech BondEvalue has launched the BondbloX Bond Exchange (BBX), a blockchain-based exchange that makes possible fractional ownership of bonds by allowing them to be traded in smaller denominations of US$1,000. The company said that this paves the way for many more investors to buy and sell bonds, making bond trading much faster, highly transparent and at lower cost.
In Asia and Europe, bond trading is traditionally the preserve of affluent individuals, institutions and corporations as they are typically traded in unit size US$200,000 in the secondary market. Trading is also carried out over the counter (by phone) making for an opaque process and pricing.
The first trade made on August 12 was between a Singapore citizen and a buyer who is a Singapore permanent resident. The transaction was for US$8,000 of BondbloX representing the underlying Olam 4.375% bond maturing 2023 at a price of 100.25%, executed through Taurus Wealth Advisors, the first member of BBX.
BondbloX claims that it is one of the first, if not the first bond depository receipt in the world, akin to a depository receipt for shares.
Settlement on BBX is on a T+0 basis, that is within seconds instead of the normal two-day settlement cycle, thereby reducing counterparty settlement risks for investors. Investors around the world can trade on BBX via web and mobile devices by opening an account with their banks, wealth managers, family offices or robo-advisors, subject to individual country restrictions on bond trading. In Singapore, BBX is open to accredited and institutional investors.
The ability to trade bonds in smaller denominations means that investors can build a diversified portfolio without a hefty outlay.
BondEvalue said it has signed up one of Singapore’s largest brokerages, UOB Kay Hian, as its initial launch partner, US’ Northern Trust as designated custodian and multi-family Office Taurus Wealth Advisors, as one of the first members of the exchange. More partners are in the pipeline and will come on board in the coming months.
BondEvalue’s Founder and CEO, Rahul Banerjee, said:
“We are excited to launch BondbloX, the world’s first bond exchange powered by blockchain technology to provide investors a fast, secure and transparent way to buy and sell bonds in smaller denominations of US$1,000.“
“Our vision is to have over 25 million people in Asia invest in bonds in the next five years, from 500,000 individuals currently. This is no small ambition but we are hopeful as we have seen millions of people, forced by Covid-19 lockdowns, going online in the last six months for their everyday transactions.”
According to Banerjee, BondEvalue is targeting the so-called “HENRYS” or ‘high-earners not rich yet’ and the exchange will, for a start, list 100 most liquid bonds out of the eight million or so bonds issued around the world. The speed to market was made possible because of the Monetary Authority of Singapore (MAS)’s Sandbox Express, which provided BondEvalue with a faster option for it to test its innovation.
BondEvalue was the first company in the bond industry to be approved under the MAS regulatory sandbox from which it is preparing to obtain the necessary regulatory approval to exit as a recognised market operator in the coming weeks.