HSBC – Orion
HSBC’s Orion is a tokenisation platform facilitating the issuance of digital bonds using distributed ledger technology (DLT). Orion leverages blockchain as a reliable source of data, with assets and settlement tokens residing on its ledger. Transactions on the platform involve the exchange of these tokens, ensuring digital ‘delivery versus payment’.
Earlier this year, HSBC announced plans to launch a new digital asset custody service in 2024, catering to institutional clients investing in tokenised securities, in tandem with its Orion platform. John O’Neill, global head of digital assets strategy at HSBC, said at the time: “I’m excited by the forthcoming launch of our new custody service for digital assets, which will complement HSBC Orion, our platform for issuing digital assets, as well as our recent launch of tokenised physical gold. These services underscore HSBC’s commitment to the overall development of digital asset markets.”
In February 2024, HSBC executed a repo transaction in Hong Kong with The Bank of East Asia (BEA), marking the region’s inaugural repo transaction involving digital bonds. Leveraging the HSBC Orion platform, HSBC facilitated a HKD6 billion-equivalent digitally native green bond issuance for the Hong Kong government, coordinated with the Hong Kong Monetary Authority (HKMA), spanning four currencies (HKD, CNH, USD, EUR).
JP Morgan – Onyx Digital Assets
JP Morgan’s Onyx Digital Assets (ODA) is a blockchain-based network which supports instant settlements and maturity of the transactions within hours instead of the current industry norm of one to two working days.
An Ethereum-based DLT platform that enables the tokenisation of traditional assets, Onyx uses a digitised version of the US dollar for products such as repo agreements and short-term intraday trading. Functioning essentially as a payment platform, it allows immediate US dollar settlement for digital repo transactions.
Speaking following the news that BlackRock and Barclays had gone live on JP Morgan’s Tokenized Collateral Network, Tyrone Lobban, head of Onyx Digital Assets, JP Morgan, said: “We built Onyx Digital Assets (ODA) to be a global, multi-asset platform that can provide our clients with a variety of new products and solutions that don’t exist today.
“ ODA already enables clients to access intraday liquidity via repo transactions, and now with the launch of TCN, clients can benefit from additional utility from their MMF investments by posting tokenised MMF shares as collateral – a faster, more cost-effective way of meeting margin requirements.”
UBS, SBI, DBS Bank – Blockchain Repo transaction
In November 2023, UBS, SBI and DBS Bank launched the ‘world’s first’ live repurchase transaction (repo) with a natively-issued digital bond on a public blockchain. The transaction automatically settled a repo, digital bond purchase and redemption using regulated digital payment tokens, across regulated entities located in three different jurisdictions (Japan, Singapore, Switzerland).
Part of MAS’ Project Guardian initiative, this repo transaction highlights the potential of blockchain technology in facilitating the cross-border distribution and settlement of capital market instruments. It involved a repo agreement to acquire tokenised Japanese Yen (JPY) secured against a JPY-denominated digital bond, with the borrowed tokenised JPY deployed to fund the acquisition of the same bond. The subsequent redemption of the digital bond and the payment of principal and interest upon maturity were executed on-chain, showcasing the capacity to manage an entire transaction lifecycle on a public blockchain.
At the time, Fernando Luis Vázquez Cao, CEO of SBI Digital Asset Holdings, said: “This groundbreaking transaction demonstrates what can be done in Japan and cross-border, in providing innovative and efficient products and services to the market and clients. It is also an example of the strength of partnerships SBI DAH has with large global institutions and across the SBI group, with SBI SECURITIES as counterparty to the repo transaction and Shinsei Trust & Banking as the issuer of JPY stablecoin.”
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