In its recently published consultation report, “Conflicts of interest and associated conduct risks during the debt capital raising process,” the International Organization of Securities Commissions (IOSCO) raises the questions of what are the benefits and risks of blockchain in debt capital raising and how the technology could address conflicts.
Aside from the consultation report, a series of papers on the application of blockchain to securities markets will be produced.
Recognized for setting the global standard for the securities sector, IOSCO is an international body that brings together securities regulators across the world. Members include the U.S. Securities and Exchange Commission, the Australian Securities and Investments Commission, and the Securities and Exchange Board of India.
The consultation report is seeking views on blockchain-related hypotheses, such as that blockchain might help create a fair allocation of debt securities by issuers and that the technology could eliminate intermediaries by replacing some aspects of debt issuance.
IOSCO created the distributed ledger technology (DLT) workstream to create papers on the application of blockchain to securities markets. One of the published papers is about the issuance of bond-i, the World Bank’s blockchain bond.
Several bond issuances have claimed to use blockchain to reduce cost and time. Last week, the Bank of China issued blockchain-based bonds worth US$2.8 billion in total to small businesses.
In Spain, commercial bank and financial services firm Banco Santander issued a tokenized US$20 million bond, while BBVA, the country’s second-largest bank, used blockchain to arrange bonds and loans.
Meanwhile, Singapore and Thailand are developing blockchain-based platforms for bond issuance.
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