HSBC, Marketnode and UOB case study: Digital native issuance of structured notes
On 26 Jun 2023, the Monetary Authority of Singapore (MAS) published a report proposing a framework for designing open, interoperable networks for digital assets (i.e., tokenised real-economy and financial assets). The report Enabling Open & Interoperable Networks was jointly developed with subject matter experts at the Bank for International Settlements’ (BIS) Committee on Payments and Market Infrastructure (CPMI), with contributions from participating financial institutions.
HSBC, Marketnode and UOB are proud to have contributed a case study double-clicking into the ‘Digital Native Issuance of Structured Notes’, which details the i) problem statement, ii) benefits and risks, and iii) design considerations.
Excerpt: Key learnings and future developments
Structured notes that are created digitally can be safekept and distributed using distributed ledgers on-chain, reducing creation and distribution times. Additionally, digital structured products in combination with the digital representation of cash could allow for atomic settlement through real-time, instantaneous DvP autonomously, thereby shortening the settlement cycle.
To ensure that the operational risks are carefully managed, a series of repeated and iterative testing on a multitude of scenarios is required. For example, the participating entity developed a platform-wide business continuity plan to cover potential platform and registrar events alongside remedial actions across various scenarios. The participating entities performed extensive quality assurance testing and multiple runs before successfully executing the issuances.
To achieve the scale and potential of the solution, the project team is contributing to industry-wide efforts to establish a set of common industry standards for asset issuance and exchange. Future integration to capabilities provided by the broader asset ecosystem will also be necessary to unlock the maximum potential of tokenisation, such as enhancing distribution via connecting to platforms such as ADDX or HSBC Orion.