By The Nation
There are three steps leading to cryptocurrency use in bond trading: first, the ThaiBMA will apply blockchain or distributed ledger technology ( DLT) for the registration of bonds. “It would be a hybrid kind of decentralised DLT. There is no need for consensus [among registrars] but it is a rotation system, analogous to Malaysia’s sultan monarchy system,” he said.
Currently, banks and securities firms act as bond registrars. The DLT will allow all registrars to see information realtime and it could reduce duplicated work. Moreover, bond subscribers would get their bonds within three days instead of 15 days currently, he said.
The DLT plan will be sent to the Securities and Exchange Commission soon for sandbox experiment, he said.
Next, the ThaiBMA will develop scripless bonds in order to make bond registration more efficient, he said.
Then we plan to issue cryptocurrency -- stable bond coins or cryptocurrency -- backed up by assets, he said.
The bond coins would be used for settlement of “gross transaction” of bond trading and it would free bond transactions from fees, he said. Traders, however, would still need to use real money to make a “net settlement”, he added.
The whole new platform is expected to make bond trading more efficient and cheaper, he said. The new platform will also be able to cope with the rapidly growing bond market with current outstanding of corporate bonds worth Bt3.5 trillion. New issuance of corporate bonds this year is estimated to reach Bt1 trillion, he said. Individual investors currently hold bonds worth Bt 1.1 trillion, while there are 10 registrars comprising banks and securities firms.
The ThaiBMA also wants to connect its system with the central bank’s cryptocurrency project, he added. The Bank of Thailand and commercial banks are currently experimenting using digital currency for interbank settlement. The coverage includes inter-bank bond trading, repurchase transactions and regulatory compliance and data reconciliation.