OCBC establishes US$1 billion digital US commercial paper programme based on blockchain
The bank says this will help strengthen its US dollar liquidity resilience
[SINGAPORE] OCBC Bank announced on Monday (Aug 25) the introduction of a US$1 billion digital US commercial paper (USCP) programme using blockchain.
This allows for near-instantaneous short-term US dollar funding capabilities for the bank, it said. This speed is achieved through tokenised securities and funds being on blockchain, added the bank, allowing it to receive funds within minutes.
OCBC seeks to “bolster liquidity resilience” amid heightened geopolitical uncertainty through this move, with the programme offering an alternative channel to tap the US$1.4 trillion USCP market to quickly raise USD.
The move means OCBC will become the first USCP issuer in the world to use blockchain through the securities’ entire lifecycle, from issuance and settlement to record-keeping and servicing.
“Given the immutable and transparent nature of blockchain, parties involved in the transaction can view and verify the same set of data in real-time,” said the bank. “This in turn enhances trust and accountability as there is an auditable record of transactions.”
OCBC’s digital programme will be facilitated by JPMorgan’s Digital Debt Service application built on the multi-asset tokenisation platform Kinexys Digital Assets. The US investment bank will also act as sole dealer for the programme.
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OCBC’s new blockchain-based programme follows a US$25 billion conventional programme that the bank launched in 2011.
The bank said the first USCP tokenised issuance under the programme took place on Wednesday last week. The six-month maturity notes were issued to an accredited institutional investor, with OCBC receiving the funds within minutes of the completed transaction, it added.
Funds raised through the “inexpensive” funding source of commercial papers will be used by OCBC for general funding purposes.
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The bank said that the digital USCP programme was assigned credit ratings of P-1 by Moody’s, and F1+ by Fitch. These are the highest ratings given by the rating agencies for short-term instruments.
“Singapore’s blockchain ecosystem is advancing fast, and asset tokenisation is gaining real momentum,” said Kenneth Lai, OCBC’s head of global markets.
Lai added: “We have already tapped blockchain for intraday repo and reverse repo transactions – capabilities added last year – and are now expanding into the USCP market to strengthen liquidity and resilience.”
OCBC’s announcement comes a few days after DBS announced the launch of tokenised structured notes on the Ethereum public blockchain.
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