OCBC, ADDX partner for first tokenised structured note

The second largest Singaporean bank by market cap has entered a strategic partnership with the private market exchange to broaden its investor base with a FCN sold at US$1m.

Traded on 28 April, the three-month tokenised fixed coupon note (FCN) is linked to the shares of a US-listed tech giant with a minimum size of US$50,000. The note is available to ADDX clients classified as accredited investors by the Monetary Authority of Singapore (MAS).

The structured note is governed by Singaporean laws and is the first product issued by a local bank on the shelf of ADDX, a Singapore-based private market digital securities platform built on blockchain and backed by a group of Asian financial institutions including Singapore Exchange (SGX) and United Overseas Bank (UOB).

The launch marks 'the start of a long-term partnership' between OCBC Bank and ADDX that will see them put out a wider variety of investment products.

'Partnering with new digital players like ADDX and deepening banking relationships with high-growth and emerging sectors allows OCBC to increase its customer proposition and tap on a larger investor base,' stated the bank.

The partnership fits with ADDX’s plans to reduce manual intervention in the issuance, custody and distribution of digital securities by using blockchain and smart contract technology ‘to fractionalise investments in a scalable and commercially viable manner’.

'While we already have a comprehensive stable of treasury products which includes sustainability-linked interest rate swaps, cross currency swaps, structured deposits and green bonds, it is important that we continue to innovate and find new channels for our products,' said Kenneth Lai (pictured), head of global treasury at OCBC Bank.

The bank expects the launch will lead to 'more diverse product offerings' that are relevant to the global accredited investor base of ADDX.

In addition to structured products, asset classes available on ADDX include private equity, hedge funds, venture capital, private credit, real estate and debt securities.

This is the third structured product distributed by ADDX following two FCNs issued by Vontobel including 'the first tokenised structured product in Asia' tracking a blue chip US stock with a minimum ticket size of US$10,000 in September 2021; and an FCN featuring a worst-of option traded in January 2022. The two structured notes collected a notional of approximately US$300m.

The new FCN posted traded notional of US$1m with DBS Bank acting as the custodian, said Oi-Yee Choo, CEO of ADDX, told SRP without disclosing the underlying share and coupon level.

"From a technological standpoint, there are no limitations to how small the minimums can go. The decision to set the minimum size for this deal at US$50,000 is a commercial one," said Choo when asked about the minimum tickets.

'Moving forward, structured products will be a key plank in ADDX’s issuance strategy,' she said, adding that more structured products are already in the pipeline. 'We are also exploring the issuance of commercial papers.’

In Asia, Singapore has been active in exploring the use of blockchain in the wealth management space, catching up Europe where there is more rapid development in structured products.

Last November, the MAS launched a new pilot programme in wealth management with HSBC, UOB and Marketnode collaborating to enable native digital issuance of wealth management products, including structured notes.