15/11/2019 – Singapore-based tech startup BondEvalue has agreed to partner with Northern Trust, a Chicago-headquartered financial services company, for the American firm to support its nascent blockchain-powered bond exchange platform, BondbloX. Besides providing digital solutions for the tech startup, Northern Trust will also offer asset servicing solutions for its platform, which BondEvalue claims is the world’s first ever blockchain-based bond exchange where bonds can be traded digitally in denominations of US$1,000.
The tech startup’s innovative platform is the first in the bond space to be approved by the Monetary Authority of Singapore (MAS) to operate in its regulatory sandbox, Sandbox Express, which offers companies and organizations a quicker, streamlined option for trialing their groundbreaking financial services and products in a pre-defined market environment. According to Sopnendu Mohanty, who is chief fintech officer at MAS, Sandbox Express is able to help innovative companies collect data – which they need to calibrate and adapt their products or services to suit the market – from clients and customers in a timely manner by granting them access to a streamlined approval process that allows for faster testing in the market.
To BondEvalue, the present-day, prevalent method of trading over the counter for bonds via brokerages and securities firms is ripe for disruption. The current way of trading bonds does not encourage transparency and is not as efficient or cost-effective as it should be. Sensing an opportunity to transform the bond trading process for the better while opening the market to an even larger pool of potential investors, the Singapore-based startup proceeded with its revolutionary BondbloX bond exchange platform.
By pioneering a blockchain-based electronic bond exchange built on Hyperledger Sawtooth, BondbloX is able to achieve so much more than what the current bond trading market can do. For one, as trade settlements are now conducted electronically, it can shorten the conventional two-day trade settlement cycle to just a matter of seconds. Additionally, its blockchain feature enables bonds to be traded in much the same way as stocks, while transplanting the bond trading process to a digital exchange platform encourages price transparency and promotes fairness.
One of the most promising features of the blockchain-powered bond exchange, however, may be its “fractionalization” capability. Rahul Banerjee, BondEvalue’s founder, says that presently due to the US$200,000 investment requirement, only a miniscule number of people in Asia are actually able to purchase wholesale bonds. He believes that this should not be the case, and that the bond market should be made accessible to all people irrespective of their wealth. With “fractionalization”, BondbloX provides a unique feature whereby it can take any US$200,000 or equivalent bond in the secondary market and change it into more affordable denominated BondbloX (fractional bonds) of US$1,000. In fact, Rahul intends for his digital bond exchange to grow the number of bond market investors to over 25 million in just under half a decade.
In order to reach out to more potential users, BondbloX is connected to robo advisors, banking institutions and wealth managers around the globe, thus permitting their customers to trade BondbloX. Here, Northern Trust will be the blockchain-based bond exchange’s sole asset servicing provider.
According to Justin Chapman, Northern Trust’s global head of market advocacy and innovation research, the support the company provides for the Singapore tech startup has the capacity to open up the bond market to a much wider pool of investors, which hitherto is accessible only to large institutions. Rahul added that the startup is very pleased to have Northern Trust on board as a partner and is looking forward to their cooperation.
BondEvalue looks to disrupt the bond market with its blockchain-powered bond exchange BondbloX. With the support of Northern Trust and MAS, the future looks bright for the Singapore startup as it pursues its goal of making the bond market more accessible to the general populace with its innovative blockchain platform.