The Thai Bond Market Association (TBMA) plans to adopt a blockchain-powered solution on its registrar bond service platform, according to a recent report by Thailand-based news agency, Bangkok Post. TBMA made the announcement that it’s advocating for a fintech platform using the blockchain technology.
According to TBMA president, Tada Phutthitada, the new registrar system will reduce the time for issuance in more than half and also boost the liquidity of the secondary market, and these ongoing plans are to be put in practice later this year.
With the ever-growing market liquidity, the issuance of bond certificates still remain passive, and this could cause severe hindrances to the growth of corporate bonds in the secondary market. According to the president, the platform will significantly decrease the bond issuance time from 7-15 days to 3-4 days, with the possibility of the time further reducing to two days. Phutthitada explained:
“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.”
The new platform has been designed to erase the need for physical certificates, as the book entries will be adequate to represent the holding and settlement of securities. The TBMA president noted that:
“We are trying to accommodate the market to grow without risks that may cause limitations.”
Mr. Tada further disclosed that the new registrar platform has been set to use the regulatory sandbox by the end of the year, and will ultimately develop to be the first fintech support to both the regulatory framework at the Thai securities and trade commission (SEC) and the financial institution of Thailand (BoT).
The platform will be developed on the basis of a smart contract platform utilizing a private blockchain which was said to supply a digitized settlement database, a bond subscription system, and bond transaction verification. It will also permit users to issuers, regulators, companies, and investors to possess access to interest rates, payments, and other bond information.
Additionally, the TBMA will develop the platform, ultimately ushering in ‘Bond Coin,’ a clearing and settlement system to be established in 2019. The bond coin is a blockchain-based token that will promote instant clearing and settlements of corporate bonds.
Chaitat Prachuabdee TMBA’s executive vice-president also disclosed that the company is now considering the prospect of launching its own “utility settlement coin” to support the digitized bond system.
This comes as an excellent innovation to traders as it will aid the growth of the secondary bond market which has seen its average value increase over the past 6 years reaching about 5.09 billion baht ($152 million) in 2017, up from about 4.33 billion ( $130 million) in 2016 and approximately 800 million ($24 million) in 2011.
This blockchain platform is not Thailand’s first adoption of cryptocurrency and blockchain related technology as Thailand’s SEC freshly issued a new regulation on ICO which only permits issuers to receive payments in Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), Ethereum Classic (ETC), Stellar (XLM), and Litecoin (LTC). In early July, the country’s Association of Securities Companies also disclosed its plans to launch a cryptocurrency exchange even the government had already partnered with OmiseGO.