Yesterday the Bursa Malaysia announced a blockchain proof of concept (POC) for tokenizing bonds at its subsidiary Labuan International Financial Exchange (LFX), an existing bond market where most of the listings are denominated in US dollars.
LFX is part of the Labuan International Business and Financial Centre (IBFC), which has its own financial services regulator and tax structure.
The trial is being run with Singapore based Hashstacs, which plans to launch a solution to issue, service, trade and clear bonds on the Trident Platform. The three banks signed up for the trial include the local branch of China Construction Bank, CIMB Investment Bank and Maybank Investment Bank. Other participants are Bursa Malaysia, the local regulator and the Securities Commission of Malaysia.
“The POC conducted in partnership with Hashstacs presents an opportunity to provide a valuable learning experience to build knowledge and obtain insights that will allow us to grow the bond marketplace,” said Bursa Malaysia CEO Datuk Muhamad Umar Swift. “The POC aims to increase operational efficiency, driving down the cost of operations as well as the cost of issuing bonds.”
Previously, Hashstacs participated in Singapore’s Project Ubin central bank digital currency trials and has worked with the Gibraltar Stock Exchange (GSX), one of its investors, on its prototype digital stock exchange. The solution uses the STACS network, which stands for “Securities Trading Asset Classification Settlement”. The company says it has a proprietary blockchain which supports smart contracts written in JavaScript or Solidity.
Meanwhile, interest in blockchain bonds is escalating in both the public and private sectors. In the last couple of weeks, the Philippines and Thailand have either released or announced government bonds being issued to retail investors. In the private sector, Japanese firm SBI recently invested in the Nomura blockchain bond venture BOOSTRY. And R3 CEO Dave Rutter has launched a new venture, LedgerEdge, for corporate bonds.
