Daiwa Securities and Progmat advance in tokenized bonds

• Daiwa Securities and Progmat are working together to innovate bond issuance, using R3’s Corda blockchain technology.
• Daiwa’s alliance with Progmat paves the way for tokenization in the financial markets, hoping to attract companies like Nomura.

In an important step towards modernizing the bond market, Daiwa Securities has joined forces with Progmat, a tokenization platform powered by MUFG, to develop a comprehensive solution for bond issuance. tokenized bonds. This project, in which SBI R3 also participates, represents a remarkable breakthrough in the application of blockchain technology in the financial sector.

Daiwa has developed a solution for pre-issue trading of bonds using R3’s Corda enterprise blockchain. This system will be integrated with Progmat, supported not only by MUFG but also by other leading financial institutions such as SMBC, Mizuho, ​​JPX and SBI. The collaboration between Daiwa and Progmat, and the involvement of SBI R3, is due to the common use of Corda technology on their platforms.

Daiwa Securities’ bond solution stands out above all for its aim of automating a process that has until now been carried out manually in the banking sector, especially with regard to bond issuance.

Traditional (manual) process:

• Contact person for investors: In the pre-marketing phase of a bond issue, investment banks typically contact potential investors through traditional methods such as phone calls, emails or instant messages. The purpose of this contact is to assess and confirm investor interest in the upcoming bond issue.
• Data compilation: The information gathered from these contacts, including details such as the level of interest, the potential amounts that can be invested and investor preferences, is recorded and organized manually, often in spreadsheets. This method can be slow and error-prone and requires a significant amount of administrative work.

Daiwa innovation (automation):

• Process automation: The solution developed by Daiwa aims to automate these phases. This means that the process of collecting information, analyzing it and organizing the data would be more efficient and accurate, probably through a digital platform.
• Future features: In addition, Daiwa plans to introduce functionalities to automatically complete inverter assignments. This means that once investor interest has been collected and analyzed, the system can automatically allocate bonds to investors based on pre-determined criteria, including the requested investment amount and the investor’s seniority, among others.

In turn, Progmat has already established a bond partnership with NTT Data, owner of Japan Information Processing, the leading conventional bond issuance and paying agent solution. NTT Data is one of Progmat’s investors, which strengthens the platform’s position in the market.

Daiwa Securities recently announced plans to test bond issuance public blockchains. Until then, Daiwa had not partnered with any of the major institutional tokenization platforms, such as Progmat and BOOSTRY, founded by Nomura. However, with this new partnership, Daiwa positions itself in a privileged position within the emerging tokenized bond market.

This collaboration between Daiwa Securities and Progmat marks an important step in the tokenization of financial assets. Blockchain technology not only makes the bond issuance process more efficient and transparent, but also opens up new possibilities in terms of accessibility and liquidity in the financial markets.

As more securities firms such as Nomura or SMBC Nikko Securities consider adopting these offerings, the tokenized bond landscape could undergo a significant transformation, benefiting both investors and issuers.