What to know:
- HSBC completed its first blockchain-based structured product issuance in Hong Kong.
- Marketnode supported the tokenized note deal as agent and digital payments manager.
- Hong Kong strengthens tokenized markets with bond reviews and stablecoin licensing.
HSBC has completed its first blockchain-based issuance of a digitally native structured product in Hong Kong. The deal used tokenized U.S. dollar notes for institutional investors. It was arranged as a private placement in the city’s financial market.
The pilot involved U.S. dollar-denominated structured notes issued in Hong Kong. Marketnode, an Asia-Pacific digital market infrastructure operator, supported the transaction. It acted as both tokenization agent and digital paying agent for the issuance.
Marketnode enabled the notes to be issued directly on the blockchain. It also managed payment flows between the bank and the investor. HSBC said the pilot tested how tokenization could improve structured product processes.
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How HSBC Plans to Simplify Structured Product Management
According to the bank, the trial spanned different parts of the product life cycle, including issuance, settlement, administration, and servicing. The goal is to determine the potential of blockchain technology in improving the efficiency of those activities within the institutional marketplaces.
Speaking about the transaction, Suvir Loomba, Regional Head of Securities Services in Asia at HSBC, highlighted that the issuance was an extension of the bank’s digital assets initiatives.
Loomba explained that the project demonstrates how the bank works with the market players on developing the blockchain technology use cases in institutional finance.
“Building on HSBC’s work in digital assets and innovation, this issuance demonstrates how we’re working with market participants to develop practical, scalable solutions for institutional-grade digital finance,” Loomba said.
Patrick Boumalham, Head of Institutional Sales in Asia at HSBC, said that tokenization could help to optimize issuance, settlement, and servicing processes. In addition, tokenization could provide a scalable base for further innovation of the products.
The structured product pilot is part of the bank’s digital assets strategy. The bank said it shows how blockchain could help facilitate capital markets operations. The testing program was dedicated to institutional participants and financial products.
Why Hong Kong Is Building a Tokenized Bond Framework
Additionally, Hong Kong develops its tokenized markets. In June, the Hong Kong Monetary Authority created an expert group on tokenized bonds. The decision was made following more than HK $6.8 billion in tokenized bonds issued by the authorities.
Among members of the expert group were HSBC, JPMorgan Securities, Standard Chartered, UBS, Ant Digital, and HashKey Group.
The legal framework, market practice, and infrastructure of the issuance process in tokenized bonds are being studied with the purpose of promoting broader issuance of tokenized bonds in Hong Kong.
Moreover, the bank enhanced its position in terms of digital assets in Hong Kong. In April, it became one of the first companies to receive a stablecoin issuing license.
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