Blockchain tech eyed to secure bond database

The Thai Bond Market Association (TBMA) is developing a central registrar system for the bond market to be used with the adoption of blockchain technology, says president Tada Phutthitada.

“We are undertaking joint studies of the system with two financial technology firms who are fintech award winners from the Securities and Exchange Commission [SEC],” said Mr Tada.

He said blockchain technology can ensure a secure distributed database and it can be designed to help improve TBMA services as it will allow bond unitholders to access their personal accounts conveniently.

Currently each bond issuer has assigned its own registrar, while bondholders mostly hold bonds of several companies. This means they have to contact each registrar one by one to check their portfolio.

It also takes at least two or three days for settlement of bond trading transactions, which creates a period of risk for buyers and sellers.

A central registrar will allow bondholders to check all of their bond assets from one platform with shorten settlement time, lowering risk.

Mr Tada said another advantage of blockchain technology is once data is recorded in the block it is difficult to alter retroactively.

“The technology is suitable to be used for our central registrar as each bank registrar can feed in data into the block and once it is recorded, no one can change it, so we don’t need to worry about a cyberattack,” he said.

The blockchain can also be used without human involvement for some types of transactions, such as bond interest calculation and payment.

The TBMA plans to set up a discussion among relevant parties to consider the pros and cons of a new central registrar system.

Following the discussion, the TBMA will develop a system prototype for testing on the SEC’s sandbox before opening it up for use.