Thai Bond Market Association (TBMA) To Execute Bond-Issuance Using Blockchain
In order to give a further push to the growth of FinTech development in the country, the Thai Bond Market Association (TMBA) is planning to implement a new registrar service platform by combining the best of blockchain and financial technology. The TBMA association plans to release this blockchain-powered registrar service by the end of this year.
For this, the TBMA President Tada Phutthitada will soon be applying to the regulatory authorities and will start experimenting solutions for this new platform under the authorities’ supervision, reports Bangkok Post.
Of course there are some huge benefits of introducing the blockchain technology to the bond issuance process. Blockchain will bring better speed, transparency and efficiency in the process of issuing bond certificates which is one of the major process of work for the TBMA. Against the existing time period of 7-15 days required to issue bond certificates, blockchain is expected to reduce this to 3-5 days and eventually less than two days.
On the other hand, use of blockchain will eliminate the need of physical certificates with book entries being sufficient to determine the holding and settlement of securities. Phutthitada said: “The faster bond certificate issuance allows bondholders to trade in the secondary market faster and reduces settlement risk for bond investors. If nothing is done to speed up bond certificate issuance, the growth of corporate bonds in the secondary market could be limited.”
Thailand has witnessed a significant growth of its secondary market in the last six years with the average trading volumes of its corporate bonds shooting up my more than six times. To support this growth further and eliminate risks in the midway, the new platform will run on a private blockchain and deploy smart contract features for its functioning.
It will require everyone including investors, issuers, regulators and registered companies to register themselves on this new platform. Some of the unique features of this platform will be a bond subscription system, a verification system for bond transactions and a bond settlement information.
In addition, during the initial stage of development, users will also be able to check interest rates, interest payments and other conditions on a bond fact sheet. The next stage will include servicing bond deposits and the last stage will introduce a Bond Coin along with a clearing and settlement system.
Last month, Thailand’s regulatory watchdog - Securities and Exchange Commission (SEC) approved a legislative framework for regulating digital currencies and ICOs. The SEC also legalized seven digital currencies using which one can invest in ICOs.