UBS, SBI and DBS have launched the world’s first live repo transaction with a natively-issued digital bond on the public blockchain Ethereum. The transaction automatically and instantly settled a repo, digital bond purchase and redemption using regulated digital payment tokens, across regulated entities located in three different jurisdictions (Japan, Singapore, Switzerland).
Conducted as part of MAS’ Project Guardian, the transaction highlights how blockchain technology enables cross-border distribution and settlement of capital market instruments in a highly efficient, flexible and cost-effective manner while enhancing liquidity management for institutions.
The transaction involved a repo to borrow tokenized Japanese Yen (JPY) against a JPY-denominated natively-issued digital bond, with the borrowed tokenized JPY used to finance the purchase of the same bond. The subsequent digital bond redemption and payment of principal and interest at maturity was executed on-chain as well, demonstrating the potential to cover an entire transaction lifecycle on a public blockchain.
Mike Dargan, UBS Group chief operations and technology officer, said in a statement: “With this pioneering transaction, we proved the feasibility of executing a fully automated and instantly settled transaction across several jurisdictions by leveraging a public DLT network under a strict compliance framework. The flexible nature of our UBS Tokenize service, allowed our partners to easily adapt and leverage our innovative product framework and technology capabilities, to their infrastructure and transaction needs.”
Fernando Luis Vázquez Cao, chief executive officer of SBI Digital Asset Holdings, said in a statement: “At SBI Digital Asset Holdings (SBI DAH), we are building an institutional grade digital asset ecosystem and are ready for its commercialization. This groundbreaking transaction demonstrates what can be done in Japan and cross-border, in providing innovative and efficient products and services to the market and clients. It is also an example of the strength of partnerships SBI DAH has with large global institutions and across the SBI group, with SBI Securities as counterparty to the repo transaction and Shinsei Trust & Banking as the issuer of JPY stablecoin.”
This transaction demonstrated benefits for financial markets, such as: real-time 24/7 settlement, operational and capital efficiency while ensuring compliance and security requirements.
In another technical pilot also as part of Project Guardian this year, UBS Asset Management collaborated with SBI Digital Markets to conclude the issuance and distribution of a tokenized Variable Capital Company (VCC) fund on a permissioned environment of the Ethereum network.