HSBC Bank has placed records of closed stock offerings worth $10 billion in the Corda R3 blockchain. the Bank’s Clients can track assets in real time via the Digital Vault blockchain platform.
Earlier, HSBC said that by March, the platform will have records of assets worth $20 billion. HSBC reported that the implementation of the platform has slowed due to efforts to expand the platform’s functionality due to high customer interest.
“We are confident that we will be able to significantly increase the volume of records posted on the platform from new and existing customers over the next 12-18 months,” said Ciaran Roddy, head of custodial innovation and strategic initiatives.
HSBC is now focusing on assets that have yet to be digitized, as well as exchange-traded tokens-stocks and traditional assets that can be divided into parts. According to Roddy, the Bank also observes the need for customers to use tokens throughout the life cycle of securities, and tokens that represent a single basket of assets.
The Bank uses a blockchain, rather than a traditional database, because it plans to tokenize closed placements of securities after digitizing them. As part of a closed placement, securities are sold among a pre-known circle of investors at a pre-agreed price.
Unlike other corporate initiatives, HSBC did not primarily evaluate cost-cutting opportunities, but rather focused on evaluating “internal efficiency improvements.” However, Roddy said that the main goal of the Bank’s cooperation with Corda is to get access to information in real time.
“This is a case where we are working for the future, as blockchain is becoming more and more popular. In addition, we also help save time and money for customers by providing them with self-service tools, and save them from having to contact us for information,” he said.
Tokenization would allow the Bank to implement tools such as smart contracts. However, the Bank first needs to attract issuers of securities to its side. In addition, regulators must recognize tokens as legitimate, legally valid, and transferable assets. Customers can access the Corda-based Digital Vault platform through their HSBC online accounts.
“They can select securities and access the entire list of documents that we have saved in relation to this particular transaction,” Roddy said.
Clients can also provide access to the system to third parties, such as regulators and auditors. Some clients have already granted access to the system to their asset managers. According to Roddy, the Bank is trying to prepare in advance for a world in which financial organizations choose tokens as the best way to issue assets.
“We see a number of traditional exchanges using DLT,” he said. “HSBC is a clearing participant and Depository, and we want to be able to support our clients who want to make transactions in the token markets.”
The Digital Vault project is not the Bank’s first blockchain-related initiative. Recall that last September, HSBC held
the first transaction of a letter of credit in yuan on the blockchain.