SEC to use bonds for DLT scheme

The Securities and Exchange Commission (SEC) expects to select corporate bonds as the initial securities under a pilot project involving distributed ledger technology (DLT) in 2020, says secretary-general Ruenvadee Suwanmongkol.

Blockchain technology will be used for trading in the regulatory sandbox, followed by an evaluation of results before moving onto other securities products, said Ms Ruenvadee.

There will be an “end-to-end” system that enables linkages with other financial regulators’ technological systems, such as the Finance Ministry and the Bank of Thailand, she said. Other securities, such as equities, derivatives and investment funds will follow suit under the three-year roadmap running through 2022, said Ms Ruenvadee.

DLT is a digital system where asset transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administrative functionality.

Thailand will become the second capital market in the world to apply DLT for all types of capital market products after Switzerland, using an end-to-end system, she said.

The SEC appointed Accenture as technology consultant and Baker & McKenzie as legal consultant for its DLT development plan. The SEC plans to present its development plan on DLT next week, then convey information to the Capital Market Development Fund (CMDF) board next month to seek project financing.

“Our legal consultant has confirmed applying DLT in the Thai capital market does not require any legal amendment, so the SEC plans to expedite the DLT project if the CMDF board agrees with it,” said Ms Ruenvadee.

Nontawat Poomchusri, managing director at Accenture, said the DLT project will ease capital market trade and information processing, increase trading efficiency and cut operation cost.