UBS, Bursa Malaysia and Union Bank of the Philippines have joined Hashstacs (STACS) and Deutsche Bank as industry collaborators in their proof-of-concept on the use of distributed ledger technology (DLT) for digital assets and sustainability-linked bonds.
The three industry participants contributed their expertise towards a DLT-enabled bonds lifecycle management solution called Project Benja for the financial industry.
Sharing its perspective as a bond arranger and investor, UBS provided insights into primary market workflows, ESG and green bond formats including sustainability-linked bonds, and ESG-focused investor preferences. The bank also focused on payment interoperability and explored the viability of a range of digital payment and settlement modes.
Bursa Malaysia considered the possibilities of a blockchain-powered Central Securities Depository that allows for efficient and orderly maintenance of records, which could unlock massive value and opportunities for the industry, bearing in mind that fragmentation in information stemming from different legacy systems used in the financial industry has been raised by all collaborators as a major pain point.
As a premier financial institution in the Philippines and a leader in the digital space, UnionBank shared its expertise as a cross-border bond issuer, covering current pain points that issuers face in the traditional capital markets financial infrastructure, requirements for cross-border issuances, as well as social inclusion and financing for micro, small and medium enterprises.
With the inputs from the industry collaborators, the practicality, interoperability, relevancy, sustainability, and effectiveness of the solution created by STACS and Deutsche Bank to simplify global markets in a sustainable and inclusive manner, are validated and reinforced.
Deutsche Bank and STACS announced the completion of Project Benja on May 18.
Hugo van Kattendijke, head of financial intermediaries for Asia-Pacific at UBS Wealth Management, says: “Not only does this proof-of-concept outline a basic ecosystem for DLT bond issuance and lifecycle management but it also serves an accessible template for the industry in the development of concepts into live commercial transactions. Its focus on ESG, an area in which DLT uniquely enables data-rich products such as sustainability-linked bonds, to deliver significant additional value for clients is particularly exciting.”
Catherine Casas, first vice president and head of the Blockchain Centre of Excellence at UnionBank, adds: “DLT is the foundation to building capital markets that are for everyone. It enables smaller businesses to borrow, instills investor confidence through transparency, and provides real-time asset trading and settlement across borders so that everyone, be it an investor or a borrower, can access opportunities from across the globe through capital markets which are truly inclusive.”