Fintech BondEvalue levels playing field for retail bond investors

FINTECH BondEvalue's blockchain-based fractional bond trading platform aims to level the playing field for retail investors by making bond investing quicker and more accessible, says founder Rahul Banerjee.

What does BondEvalue do?

Banerjee: Our vision is for everyone in the world to be able to buy bonds.

BondEvalue's BondbloX Bond Exchange - the world's first fractional bond exchange - is regulated as a recognised market operator by the Monetary Authority of Singapore.

We are enabling investors to buy bonds with the same ease as stocks - digitally and on the go. Our technology allows investors to buy and sell bonds in denominations of US$ 1,000 instead of the usual US$ 200,000.

As an exchange, our prices are fully transparent as the algorithm surfaces the best prices so that investors can have a peace of mind. We have integrated with the largest global custodians, Citibank and Northern Trust, to keep clients' securities and cash safely with them.

What are the investor pain points that BondEvalue hopes to address?

Banerjee: Bonds, for the most part, are bought and sold on the phone. They have been a great asset class and most investors have a significant exposure to bonds in their portfolios, which increases as people age. However, it is incredibly hard to buy and sell bonds - you don't have access to the true prices and even basic bond data like coupon schedules, trading history and ratings are hard to come by. As such, a lot of investors find the lack of transparency off-putting.

Regulated exchanges like BondbloX will help to solve a lot of the problems.

At the height of the pandemic in March 2020, most asset classes sold-off, including bonds. However, bond investors could not find any liquidity.

This was primarily due to the lack of a proper mechanism to match buyers with sellers. While stock investors too saw increased volatility, they were able to trade stocks easily on electronic exchanges.

With BondbloX, bonds can be traded in smaller denominations electronically just like equities. This not only makes bonds accessible to a wider range of investors, but also allows existing bond investors to diversify their investments by up to 200 times.

What progress has the company made since the launch of BondbloX?

Banerjee: We are a five-year-old company now. Regulated exchanges are a lot of hard work. I think our single biggest achievement has been to allow everyone to save and invest like the wealthy. I believe we are the only regulated exchange where global custodians connect directly on-chain with us. What this allows us to do is to cut the settlement time from two days, to just a few milliseconds. This settlement process permits members to buy and sell bonds without taking counter-party risk.

On a more personal front, I am proud that while being based in Singapore, we are transforming global capital markets. We have institutional members from Hong Kong, Indonesia, the United Kingdom, Singapore and United Arab Emirates. Our exchange lists issuers from around the world. Technology has shrunk the world with capital flows being channelised by efficient tech and prudential regulations.

Why do you think it has taken so long for a platform like BondbloX to come to the market?

Banerjee: Most humans and old calculators can't calculate the yield on a bond as the math is non-intuitive.

Bond desks and dealing rooms are running on the same tech stack for the last 20 years, the same phones, keyboards, and PC-based systems.

Distributed Ledger Technology coupled with cloud computing and advanced mobile telephones are the foundation of Web 3.0. This has led to the first major overhaul of dealing rooms.

Prior to these technological advances, it was not possible for individuals to buy bonds from each other. We entered the MAS regulatory Sandbox Express where we were able to experiment and perfect our technology.

What are some of BondEvalue's key areas of growth in the coming years?

Banerjee: We will remain focused on the fixed income market. Our technology is being applied to transform local currency bond markets as well. We have already set up a joint venture in Mexico and have a subsidiary in India. India, Indonesia, Japan and China are some of the largest markets for us.

On the product side, we see opportunity in digital bond funds in addition to the digital bonds that we already have.

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