The Singapore-based firm has been approved to enter the Monetary Authority of Singapore’s (MAS) Sandbox Express to launch a blockchain-based bond exchange that reduces the minimum investment amount of bonds to US$1,000 via BondbloX – a fraction of a conventional US$200,000 bond wherein each BondbloX has a denomination of US$1,000.
Instead of traded over-the-counter (on the phone), which makes bond prices opaque and the process inefficient, BondEvalue uses a permissioned blockchain that allows bonds to be traded electronically, like stocks. This makes prices more transparent and trade settlement instantaneous, which is a huge improvement from the traditional process of a two-day trade settlement cycle.
Rahul Banerjee, founder of BondEvalue, commented: “Today only about 50,000 people in Asia are able to afford wholesale bonds, due to the US$200,000 minimum investment. BondBloX will grow this number to over 25 million in the next 3-5 years. The bond market should not be restricted to just the affluent but rather be accessible to all, like equities.”
The platform connects to banks, wealth managers and robo-advisors across the world, allowing their customers (limited to accredited investors in Singapore) to trade BondbloX.
Mr Sopnendu Mohanty, Chief FinTech Officer at Monetary Authority of Singapore, said: “The ability to gather early feedback from actual customers plays an important part in determining the success of innovation. Sandbox Express achieves this by providing a fast lane approval for innovations to be tested quickly in the market. We are delighted that it has enabled BondEvalue to jumpstart an innovative experiment to address real challenges in today’s bond market.”
The bond exchange is built on Hyperledger Sawtooth. Brian Behlendorf, Executive Director at Hyperledger, stated: “Hyperledger is excited to see BondEvalue’s bond exchange platform, based on Hyperledger Sawtooth, going live. BondEvalue will be able to provide greater financial inclusion through enhanced transparency, security and efficiency that Hyperledger Sawtooth’s permissioned blockchain provides. It is a great example of how permissioned blockchain can disrupt traditional markets and offer new, interesting business models and opportunities.”
Jonathan Horan, Capital Markets Partner, Singapore, Linklaters, added: “We are delighted to have had the opportunity to work with BondEvalue and MAS, on the FinTech regulatory sandbox process and BondEvalue’s digital platform. Entry into Sandbox Express marks a significant step in real-life blockchain implementation to redefine international debt capital markets while being fully compliant with extant laws.”