Blockchain Platform For Bond Transactions Planned By Thailand Bond Market Associationbr>
The Thailand Bond Market Association (TBMA) is planning to create a blockchain platform for corporate bond transactions.
TBMA is mandated, with full support of the governing agencies, as the sole information center and pricing agency for the Thai domestic bond market. All types of debt securities issued by government, state-owned enterprise (SOE), state agency, and corporate sectors are required to register with the TBMA.
The Bangkok Post reported that the TBMA has received the green light from the country’s Securities and Exchange Commission (SEC) to develop the private blockchain platform that will be only accessible to registered members, such issuers, regulators, registered companies, and investors.
TBMA president Tada Phutthitada said that the development of the platform will be divided into three phases and will start next month. The first stage will see the development of a bond registrar service platform that will be used for bond trading and information.
“Services on the bond registrar platform include bond settlement information system, a bond subscription system and a verification system for bond transactions,” said Phutthitada. “The platform, to be developed on a smart contract platform, will employ private blockchain. The platform will also contain a bond fact sheet for information such as interest rates, interest payments and other conditions.”
In the second development phase, which is estimated to take nine months for completion, the platform will add new features to enable bond deposits. In the third phase, TBMA will develop a clearing and settlement system, dubbed “Bond Coin,” on top of the blockchain platform.
“Once all three stages are completed, bond clearing and settlement can happen immediately, instead of the existing settlement period of two days,” Phutthitada said. “Financial institutions, considered a middleman between bond traders and Thailand Securities Depository (TSD), will have no role in the clearing and settlement process.”
Chaitat Prachuabdee, executive vice-president of TBMA, said that the blockchain platform is expected to improve the transparency of corporate bond information and can potentially shorten the transaction time from currently 7 – 10 days to just 1 – 3 days.
The news came after the Bank of Thailand, the country’s central bank, announced that has established a regulatory sandbox for financial institutions and FinTech firms to test new technologies and operating standards in a safe environment before officially launching the products and services. The BoT added that it was reviewing blockchain applications for cross-border payments, supply chain financing, and document authentication.