HSBC turns to blockchain to digitise private placement records
HSBC has launched a custody blockchain platform called Digital Vault to digitise the transaction records of private placements.
The platform was developed by the bank’s securities services division, and HSBC reckons it will allow investors to access records quickly and efficiently “at a time when investment in the private asset markets is growing strongly”.
A private placement is the sale of stock shares or bonds to pre-selected investors and institutions rather than on the open market.
HSBC says that due to their tailor-made nature, records of private placements have struggled to move from paper to electronic formats because of a lack of standardisation.
“Our clients want real-time visibility of their private placement transactions so that they know when they will receive the coupon on a private debt transaction or to facilitate an audit of transaction records,” says Stephen Bayly, chief information officer at HSBC Securities Services.
“Private assets are prime candidates for digitisation and we see this platform as a key step on the journey as the model evolves. We are preparing for the future, in which the full transaction lifecycle could be stored on a ledger, including issuing digital tokens instead of paper certificates.”
Sebastien Danloy, global head of asset owners and managers, HSBC Securities Services, adds: “We have seen an increasing number of clients investing in private assets as they look to pick up the kinds of yields not widely available in the public markets. Our Digital Vault will bring greater functionality to record-keeping in the private placement markets.”