HSBC aims to shift $20 bn assets to blockchain platform

HSBC aims to shift $20 billion worth of assets to a new blockchain-based custody platform by March, Reuters reported.
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The platform, known as Digital Vault, will give investors real-time access to records of securities bought on private markets.

The HSBC platform will digitize paper-based records of private placements, using blockchain to reduce the time it takes investors to make checks or queries on holdings.

Records of private placements are typically held on paper and lack standardization, making access tricky and time-consuming. HSBC currently looks after up to $50 billion worth of the assets.

HSBC could not quantify the amount that could be saved for the bank or its clients by the platform.

Demand for private placements of both debt and equity have grown significantly in recent years, as investors search for higher returns amid low interest rates worldwide and technology firms in particular shun the scrutiny of public markets.

HSBC expects the global value of private placements to hit $7.7 trillion by 2022, a jump of 60 percent from five years earlier. Over the same period, it thinks allocations by asset manager clients will grow to 20 percent from 9 percent.

Ciaran Roddy, who heads custody at HSBC’s securities services arm, said interest in private placements from U.S. and British insurers, as well as Asian and Middle Eastern sovereign wealth funds, is on the rise.

Windsor Holden, an independent consultant who tracks blockchain and cryptocurrencies, said major savings were unlikely in the initial stages of projects such as the custody platform.

“I wouldn’t expect to see huge savings, or huge efficiencies announced in the first year to 18 months,” he said.