The association announced it's pushing for a fintech platform using blockchain technology. The new registrar system will cut issuance times in more than half. The Thai Bond Market Association (TBMA) plans to implement a new registrar service platform combining financial technology with blockchain technology. There…
The association announced it’s pushing for a fintech platform using blockchain technology. The new registrar system will cut issuance times in more than half.
The Thai Bond Market Association (TBMA) plans to implement a new registrar service platform combining financial technology with blockchain technology. There are ongoing plans to put it to practice during the current year to improve the growth of the secondary market.
President Tada Phutthitada of the TBMA wishes to apply to the regulatory sandbox by the end of the year to start the live experiments of the new platform under the regulators’ supervision. If they succeed, this will be the first fintech platform apply to both the Bank of Thailand and the country’s Securities and Exchange Commission (SEC).
While initially the platform is expected to start issuing bond certificates in 3-4 days — as opposed to the usual 7-15 days, — the ultimate goal is to reduce that time to two days. The new platform will eliminate the need for physical certificates, as the book entries will be sufficient to represent the holding and settlement of securities.
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 President recognized the recent growth of the secondary market over the past six years and wished to support its growth by trying to eliminate any risks that might limit it. Last year, the country reached 5.09 billion baht in the average trading value of corporate bonds, a significant increase from 800 million in 2011.
The platform will run on a private blockchain and deploy a smart contract to operate it. Issuers, registered companies, regulators, and investors will need to register to be allowed to use the platform. A bond subscription system, bond settlement information, and a verification system for bond transactions are among the features planned for the platform.
Users will be able to check interest payment, interest rates, and other conditions on a bond fact sheet during the initial stage of the platform. In nine months, the new phase is expected to start servicing bond deposits. The last stage will take twelve months until completion, and it will introduce the Bond Coin, a clearing, and settlement system.
Thailand’s SEC has recently issued a new regulation on ICO which only permits issuers to receive payments in Bitcoin, Ethereum, Ripple, Bitcoin Cash, Ethereum Classic, Stellar, and Litecoin. Earlier this month, Thailand’s Association of Securities Companies also announced its plans to launch a cryptocurrency exchange — and even before that, the government had already partnered with OmiseGO.
Featured image from Shutterstock.
Last modified: January 24, 2020 11:03 PM UTC