NSE just did something interesting with the Indian bond market

General
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NSE has facilitated India’s first tokenised corporate bond issuances, with REC and L&T raising ₹1,000 crore together.

I know tokenised bonds sounds a bit complicated, but from what I understand, the basic idea is to use blockchain technology to make the process of buying, settling and managing bonds more digital and faster.

For example, today when we buy a bond, there are quite a few processes involved before everything is settled. With tokenisation, some of these processes could potentially happen much faster and with less paperwork.

I feel the bigger impact could come later.If this technology eventually makes bonds easier to buy and trade, especially in smaller amounts, we could see more retail investors participating in the corporate bond market.

It could also help improve liquidity, which has always been one of the challenges in the bond market.

Obviously, it’s still very early and this is just a pilot. But I feel this is something worth keeping an eye on.

We saw how demat changed the equity market. Could tokenisation do something similar for bonds, let’s see how it goes.

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Based on the underlying tech supporting atomic transactions,
here’s hoping to see teh ability to
place bids on multiple bonds
without requiring separate margin for each open order
with the gurantee that only one of the orders will ever go though.

This should enable users to express their intent
to purchase what they perceive as fungible assets.
by submitting orders like -

“Here’s 10000 rupees to buy of any Sovereign GSEC or SDL
maturing between 5-8 years with a YTM of 9%”

“Here’s 5000 rupees, buy any AAA rated bonds with highest YTM in the pharma or FMCG sectors”.

Thinking along these line, “Smart contracts” come to mind.