Singapore fintech BondEvalue brings bond trading to masses with BondbloX, world’s first blockchain-based bond exchange; goes live with first trade
- Investors can trade in smaller sizes of US$1,000 unlike typical bond trades of at least US$200,000
- BondbloX blockchain-based platform means faster, highly transparent trading at lower cost
- UOB Kay Hian joins as initial launch partner, along with Northern Trust as custodian and Taurus Wealth Advisors as first member
Singapore, 12 August 2020 – The first trade on the world’s first blockchain-based bond exchange was executed today.
Singapore fintech BondEvalue has launched BondbloX Bond Exchange (BBX), the first blockchain-based exchange that makes possible fractional ownership of bonds by allowing them to be traded in smaller denominations of US$1,000. 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 today 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 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 be onboarded 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.“
“We believe BondbloX will be an industry game changer. 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.”
“We believe that once investors have experienced BondbloX, they will take to online bond trading with the same fervour they do for equity trading.”
Mr Banerjee said 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.
Mandeep Nalwa, CEO of Taurus Wealth Advisors, said: “It is wonderful to see this complete price transparency in the bond market for the first time.”
BBX will charge a flat fee of $2 per trade, irrespective of size and a platform fee of 20 basis points annually, while its partners can opt to charge a commission for each transaction.
BBX is built on permissioned blockchain by Hyperledger Sawtooth, an enterprise open source system for creating and operating a digital ledger of transactions that can be duplicated and distributed across an entire network of computer systems on the blockchain. The blockchain network is secure while the records are immutable and time-stamped.
Sopnendu Mohanty, Chief FinTech Officer, MAS, said: “We congratulate BondEvalue on a successful launch despite headwinds from the Covid-19 pandemic. BondbloX is the latest example of a groundbreaking application of blockchain technology in the capital markets, enabled by experimentation in the MAS regulatory sandbox. We are excited to see productionalisation of blockchain in the bond trading market and look forward to greater adoption in transforming financial services.”
Wilhem Lee, Senior Executive Director of UOB Kay Hian, said: “As the largest brokerage in Singapore, we are proud to be the initial launch partner of BondbloX. Asian bonds remain attractive to local and regional investors despite the global uncertainty and market downturn, and we are confident that this partnership will provide our customers access to new sources of returns and opportunities to build a more diversified portfolio.”
BondEvalue said investor confidence in the integrity of the platform offering will be enhanced by having Northern Trust, a US’ financial services company with assets under custody of more than US$11 trillion, as its asset servicing provider.
Justin Chapman, global head of Market Advocacy & Innovation Research at Northern Trust, said: “We are excited to be working with BondEvalue to support a blockchain application that will broaden financial inclusion by opening up institutional bond markets to more investor types.
“Singapore continues to be a prominent market for deploying distributed ledger technology (DLT) in the financial services system. The fintech regulatory sandbox environment has enabled Northern Trust to work collaboratively with BondEvalue to the benefit of investors and the wider capital markets ecosystem. Market exchanges across Asia-Pacific will be watching this important development for DLT with great interest.”
BondEvalue was established in 2016 to provide electronic bond trading services. Started by two former bankers and MBA classmates, Mr Banerjee who previously worked at Citibank, Credit Suisse, Nomura Securities and Standard Chartered Bank, and Rajaram Kannan, who was Senior Vice President, Treasury and Markets Technology at DBS Bank. BondEvalue operates from offices in Singapore and India, and recently expanded to Mexico with the appointment of Jaime Zenizo as the CEO of BondEvalue Mexico. Previously the head trader for HSBC Mexico, Mr Zenizo took up the new position on 1 July 2020.
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. Linklaters is legal advisor to BondEvalue.
 Representing an unsponsored depository receipt of the underlying bond
For more information on the BondbloX Bond Exchange, visit https://www.bondblox.com/