UBS, DBS and SBI execute world first live repurchase transaction of natively-issued digital bond on public blockchain

This is part of MAS’s Project Guardian, a government-industry partnership to test the feasibility of asset tokenisation.

The world’s first live repurchase transaction (repo) of a natively-issued digital bond has been executed on a public blockchain, according to a release by UBS Singapore on Nov 14.

This was conducted as part of the Monetary Authority of Singapore (MAS)’s Project Guardian, a government-industry partnership to test the feasibility of applications in asset tokenisation. The repo was carried out with UBS, SBI Digital Asset Holdings (SBI DAH) and DBS.

The repo, which is a form of short-term borrowing that involves one party selling a security to another for cash, involved borrowing tokenised Japanese yen against a JPY-denominated natively-issued digital bond. The borrowed tokenised JPY was also used to finance the purchase of the same bond.

UBS notes that 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 which are Japan, Singapore, Switzerland.

The subsequent digital bond redemption and payment of principal and interest at maturity was executed on-chain as well. The release notes that this demonstrates the potential to cover an entire transaction lifecycle on a public blockchain.

Mike Dargan, UBS Group chief operations and technology officer says: “With this pioneering transaction, we proved the feasibility of executing a fully automated and instantly settled transaction across several jurisdictions by leveraging a public distributed ledger technology (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.”

“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,” says Fernando Luis Vázquez Cao, chief executive officer of SBI DAH.

UBS notes that as part of Project Guardian in 2023, UBS Asset Management also collaborated with SBI Digital Markets to conclude a technical pilot for the issuance and distribution of a tokenized Variable Capital Company (VCC) fund on a permissioned environment of the Ethereum network.

The pilot is part of UBS’s global distributed ledger technology strategy, focused on leveraging public and private blockchains networks for enhanced fund issuance and distribution. It also forms part of the broader expansion of UBS’s tokenization services through UBS Tokenize.

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