iSTOX, an MAS-regulated platform that uses blockchain and smart contract technology for multi-asset digital securities, is going live with its product line of digital commercial papers.
On that note, iSTOX has partnered with CGS-CIMB and iSTOX to launch a S$150-million commercial paper programme in digital securities form.
The product claims offer investors higher interest rates than bank fixed deposits. Commercial papers (short-term corporate debt) form a US$1-trillion market in the US, over US$950 billion in Europe, and they are gaining momentum in Asia.
The issuance, being carried out using digital securities, will be used to fund operating expenses and near-term obligations of CGS-CIMB. Investors were offered a 1% per annum interest rate over 3 months.
The product launch targets fixed income investors who are turning away from traditional cash management options due to extremely low interest rates.
Carol Fong, Chief Executive Officer at CGS-CIMB, said: “This is the first commercial paper programme we have done in digital securities form, and it allows us to tap an alternative source of funding and a wider spectrum of investors. In working with iSTOX to launch this programme, we were pleasantly surprised that it was completed in half the time a traditional issuance would usually take.”
Choo Oi Yee, CCO at iSTOX, commented: “CGS-CIMB as an issuer was able to realise the maximum benefits of digital securities because they chose a 100% digital route, with no traditional issuance carried out alongside it. This significantly reduced the need to work with multiple intermediaries, which made the issuance faster and more cost efficient.”
The CGS-CIMB digital commercial paper is now listed for trading on the iSTOX secondary exchange, giving investors the option to cash out ahead of maturity.
iSTOX also facilitates digital issuances for other private market securities, including funds, bonds and equity. The efficiency gains from tokenisation enables fractionalised ownership, lower fees and better liquidity.
The firm uses blockchain and smart contracts to automate manual processes in the issuance, custody and post-sale management of a security, such as the payment of dividends or coupons, the real-time tracking of ownership, and the settling of trades, which happens instantly on the iSTOX exchange instead of the 2 or more working days needed by most exchanges.
The iSTOX platform boasts accredited investors from 24 countries, spanning Asia, Europe, the Americas (excluding the US), Australia and New Zealand.
The platform is attractive for issuers for its announced lower minimum fundraising threshold, lower fees, as well as faster speed to issuance, which means less uncertainty in a rapidly changing market.
iSTOX is fully regulated by the Monetary Authority of Singapore and backed by Singapore Exchange, Temasek-subsidiary Heliconia Capital and Japan government-backed investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan (DBJ).
The Singapore based blockchain fintech and capital markets service provider hired Choo Oi Yee as its Chief Commercial Officer in 2019. The executive is responsible for leading the firm’s overall business growth.