Out-Law News | 01 Jul 2021 | 2:46 am | 1 min. read
DBS Bank has launched a fully digital and automated fixed income execution (FIX) platform, allowing issuers to directly connect with investors without the involvement of a bank.
It is the first such platform in Asia and comes amid digital transformation of the capital markets, according to a statement by the bank.
The platform aims to make access to the capital markets more time and cost efficient in order to create more inclusive and accessible markets for issuers, DBS said.
Keppel Corporation is the first corporate issuer to have its $1 billion Euro Commercial Paper Programme digitalised for issuances under the FIX Marketplace and has appointed DBS the sole arranger and dealer of the programme.
The first version of the platform will provide issuers with an interface to issue their own bonds directly into the market while maintaining the ability to execute bond transactions via dealers. Deals could be launched with one click.
The platform allows for direct order taking and transparent allocation to investors on primary market bond issuances; and fully digitalises and automates documentation and primary trade confirmation generation.
DBS said that the platform would give issuers and investors “the tools and information to make more informed funding and investment decisions”.
Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The launch by DBS Bank of a digital bond issuance platform is likely to represent a paradigm shift, as it provides bond issuers with the ability to directly access the bond marketplace, and reach out directly to bond investors, instead of having to do so through the more traditional approach of having a bank involved. The resultant easing of the traditional restrictions on access to the marketplace, and the consequential ease of access provided by this initiative is also likely to enable bond issuers to react more quickly to market opportunities, and provide more choices to bond investors in this regard.”
For the next phase of development of the platform, issuers will be able to issue self-led digital bonds which can be listed on the DBS Digital Exchange (DDEx), providing companies with an alternate investor base to tap capital markets for their business and growth ambitions, DBS said.
DDEx was launched in December 2020 and is part of an integrated digital asset ecosystem which leverages on blockchain technology to provide clients with a secure and transparent platform to raise funds from the private market.
In May, DBS issued a S$15m ($11m) digital bond in its first security token offering (STO).
Rival bank UOB piloted the digital issuance of S$600m ($441m) in perpetual capital securities in June by tapping Marketnode's digital asset issuance, depository and servicing platform. The digital bond is run in parallel with the conventional issuance process.