Stockbroking platform SBI Securities is set to issue a digital corporate bond through the blockchain technology in November. In a statement, SBI Securities stated that the bond will be sold mainly to the exchange’s individual customers.
The corporate bond scheme seeks to provide investors with an opportunity to predominantly invest in corporate bonds. Furthermore, SBI Securities will use blockchain technology to manage investors who hold corporate bonds internally.
The company also plans to use digital securities to finance business development in the future.
Back in 2016, SBI Securities partnered with IBM to test the potential of blockchain technology for bond trading. From the trial, SBI Securities was to commercialize the technology.
Importance of blockchain technology in bond issuance
SBI Securities add to the number of growing institutions deploying the blockchain technology in issuing bonds.
The blockchain technology eliminates the need for middlemen who make the process tedious. The system allows registered members like issuers, regulators, registered companies, and investors to participate in the bond issuance.
In most cases, corporate bond issuance through the blockchain occurs in several phases. Most importantly, blockchain technology usually speeds up the settlement process.
The development comes after SBI acquired the Japanese crypto exchange platform, TaoTao. The acquisition came after TaoTao ended its partnership with Binance. TaoTao will operate as a wholly-owned subsidiary of SBI Liquidity Market. According to Tao Tao:
“After careful examination of our negotiations with TaoTao Inc., we decided not to further pursue our efforts for the alliance…Binance is exploring other avenues of growth for the region in a compliant manner.”
SBI already operates its crypto exchange, SBI VC Trade, in Japan. The company stated that TaoTao’s acquisition would help it to expand the crypto business further.