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HSBC transfers £20bn worth of paper records to a custody blockchain

Distributed ledger technology will be used to digitise investor assets

29 Nov 2019

Digital chain

HSBC has launched a custody blockchain platform to digitise the transaction records of private placements.

This is one of a number of distributed ledger technology projects HSBC has undertaken over the last couple of years.

The 'Digital Vault' has been developed by the bank's securities services and enables investors to access records of their private assets instead of having to request a search of paper-based records. The aim is to bring greater functionality to record-keeping.

Private placements, which are stocks, bonds or securities from private investors, are tailor-made transactions with records that have not generally moved from paper to electronic format because of a lack of standardisation, the bank said. It aims to move $20 billion (£15 billion) worth of these assets by March, according to Reuters.

The banks said its decision to use blockchain was in response to an increasing number of clients investing in private assets that are looking to pick up the kinds of yields not widely available in the public markets.

By using blockchain to underpin the Digital Vault, HSBC said it gives it the option to move more of the transaction lifecycle on to the ledger in future.

"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," said Stephen Bayly, CIO of 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."

This follows on from the banks offer blockchain-based projects, such as the $250 billion Forex trade deals announced earlier in the year and its first blockchain transaction completed in 2018.