Blockchain Technology Set to Revamp Thai Bond Market

Blockchain Technology Set to Revamp Thai Bond Market

In a bid to speed up the time taken to issue bond certificates, the Thai Bond Market Association (TBMA) is turning to blockchain technology. Its registrar service platform will be revamped using a combination of financial technology and blockchain to boost its growth according to a report by the Bangkok Post last week.

TBMA president, Tada Phutthitada, said the registrar service platform will submit an application to regulatory sandboxes at both the Securities and Exchange Commission (SEC) and the Bank of Thailand by the end of the year. Subject to a successful application, this would give TBMA the green light to conduct live experiments on the net platform under the watchful eye of regulators.

The liquidity of the bonds market in Thailand has enjoyed rapid growth but the slow issuance of bonds remains a cause for concern. Currently it takes between 7-15 days to issue bond certificates and if the process is not sped up, Phuttitada warned that market growth of corporate bonds could eventually stagnate.

“We are trying to accommodate the market to grow without risks that may cause limitations,” said Phutthitada, speaking to the Bangkok Post.

Over the last six years, the average trading value of the secondary bond market has grown in leaps and bounds. In 2017, the market topped out at 5.09 billion baht (US$152 million), beating out the 4.33 billion (US$130 million) in 2016 and 800 million (US$24 million) in 2011.

In the first phase, the updated registrar service platform will aim to reduce the waiting period to 3-4 days, before eventually working towards bond issuance within two days. The proposed registrar platform will boast features such as a digitized settlement database, bond subscriptions and verification of bond transactions. It will also give all users access to information such as interest rates, payments and other bond-related statistics.

The moves being made by the TBMA further indicates Thailand’s willingness to embrace blockchain technology, with the SEC having recently issued new regulations on ICOs, with issuers only able to receive funding in Bitcoin, Ethereum, Ripple, Bitcoin Cash, Ethereum Classic, Stellar, and Litecoin.

In addition, the Association of Securities Companies (ASCO), a body that represents Thai securities firms, are also looking at the possibility of launching its own cryptocurrency exchange, which would be fully compliant with government regulations. All in all, it looks like blockchain and cryptocurrency have a bright future in Thailand, which could pave the way for more countries in the region to follow in its neighbour’s footsteps.

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