BondbloX represents fractional bonds traded on the BondbloX exchange, and contains fractional interests in the Underlying Bond.
Conceptually, BondbloX works exactly like American Depositary Receipts (ADRs) or Global Depository Receipts (GDRs) where an issuer, in this case, BondEvalue Pte. Ltd (a Recognized Market Operator under the Monetary Authority of Singapore), re-lists the original bond (Underlying Bond) onto an exchange in a smaller minimum denomination, thereby allowing it to be traded in fractional sizes.
The BondbloX created works using simple pass-through mechanics where the beneficial entitlements to the Underlying Bonds are conferred to the BondbloX holder, based on the fractional size held.
Structurally, BondbloX exchange works entirely different from traditional bond markets, as it uses an exchange model for all-to-all order matching. This contrasts the over-the-counter model that currently exists with phone dealers servicing individual investors.
Settlement also happens instantaneously on blockchain and participants on the blockchain do not face the usual T+2 or T+3 settlement cycles when trading BondbloX.
By changing the order flows, order matching processes and allowing BondbloX to trade electronically on an exchange model, we have a great efficiency advantage over the current human-dependent over-the-counter model. All these cost savings translate into better prices and lower fees.
The BondbloX Exchange, like any other exchange, lists eligible instruments that can be traded on it. The curation of the bond universe is jointly performed by the exchange, its members and market makers, to carefully bring diversification opportunities to investors in terms of industry, tenor, ratings, and also a decent yield pick-up.
For any listed BondbloX, investors may deposit with the exchange the Underlying Bond. This will be custodised and safeguarded by one of our Designated Custodians, Citibank N.A., or The Northern Trust Company. Once deposited, the equivalent holdings will be converted to BondbloX and credited to the sender’s BondbloX account, making it available to trade.
BondbloX is also dual-fungible, i.e. conversion back to the Underlying Bond is also possible. Investors holding sufficient BondbloX holdings meeting the minimum denomination may choose to convert their BondbloX into Underlying Bonds and have it sent back to their own custodians.
Ownership of BondbloX is recorded on blockchain and the blockchain is maintained by multiple parties (including our Designated Custodians) each deploying nodes to run consensus that together share the same data.
The debentures register maintained on blockchain provides the definitive record of BondbloX ownership. Blockchain maintains data in an immutable fashion where every transaction is recorded and cannot be altered without other parties knowing.