Northern Trust, a custody bank, has begun to test the trade of fractionalized bonds using blockchain technology. The banking institution is working together with BondEvalue, a debt market firm based in Singapore.
BondEvalue is set to provide asset services for the bank, which will tokenize high-grade bonds for retail investors using the Hyperledger Sawtooth technology. Normally, this type of investment is too large for retail investors, but by tokenizing the assets, someone can buy them without having large amounts of cash.
This shows the interest the bank has in the new technology. After the institution sold its first equities using the blockchain. Northern Trust has definitely shown some interest in the area. With $124 billion of assets under its custody, the bank is currently the 24th largest one in the U.S., so its efforts to use the blockchain are very relevant to the industry.
Justin Chapman, the global head of market and innovation at the bank, has affirmed that Northern Trust has created a solution that can be used in multiple jurisdictions and that the focus of the bank right now is to improve the blockchain-based services to offer the best investments for the clients.
Initially, the service will be offered in Singapore using the local sandbox initiative. If the pilot manages to be successful, the bank will continue the project together with BondEvalue and try to take it to global markets.