Singaporean bank OCBC Bank has partnered with the country’s private market exchange ADDX to distribute its first tokenised equity-linked structured note to accredited investors.
The fixed coupon note, launched in early May, is the first product issued by a Singapore bank to land on ADDX’s shelf, both parties said in a statement on Wednesday.
It also marks the start of a long-term partnership between ADDX and OCBC Bank that will see both parties work together to put out a wider variety of investment products.
The note is linked to shares in a United States-listed tech giant and was launched on the ADDX platform at a minimum size of $50,000.
Fixed coupon notes are equity-linked structured notes that pay regular distributions at pre-defined intervals, provided that no extraordinary event or trigger event has occurred according to the terms of the notes.
Fixed coupon notes present a way for investors with a specific view on the price movement of an underlying security or a basket of securities to generate additional cashflow while gaining potential exposure on the underlying security(ies).
According to the statement, partnering 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.
Tokenizing the fixed coupon note will in turn allow more accredited investors to access the product.
“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,
“We are therefore pleased to be the first Singapore bank to offer an equity-linked structured note in tokenized form on ADDX,” said Kenneth Lai, OCBC Bank’s Head of Global Treasury.
According to him, it is the first innovation resulting from a longer-term partnership with ADDX, and he is hopeful that it will lead to more diverse product offerings that are relevant and appealing to the global accredited investor base of ADDX.
“We are excited about the possibilities ahead, especially given the uniqueness and accessibility of this equity-linked structured note,” he added.
Headquartered in Singapore, ADDX is on a mission to make investing fairer by democratizing private markets.
Using blockchain and smart contract technology, ADDX reduces manual interventions in the issuance, custody and distribution of private market products.
The resulting efficiency from the use of digital securities allows the platform to fractionalize investments in a scalable and commercially viable manner.
To date, ADDX has listed more than 70 deals on its platform and worked with blue-chip names such as Hamilton Lane, Partners Group, Investcorp, Singtel and CGS-CIMB, as well as Temasek-owned entities Mapletree, Azalea, SeaTown and Fullerton Fund Management.
Asset classes available on ADDX include private equity, hedge funds, venture capital, private credit, real estate, debt and structured products.
According to ADDX Chief Executive Officer Oi-Yee Choo, structured products are designed to provide investors with unique risk and return characteristics that may not be available through traditional investments, and are an attractive option for investors weighing yield-generating options in the current economic climate.
These products can potentially offer higher returns than bonds or fixed deposits – they typically include a combination of a fixed-income component and a derivative
component providing exposure to the performance of underlying assets such as stocks or commodities, she noted.
Moving forward, she said structured products will be a key plank in ADDX’s issuance strategy.
She opined that investors today are looking for a full range of products that enables each segment of their portfolio to be deployed in a manner that maximizes returns while diversifying risks.
“We are honoured to work with OCBC Bank, a reputable issuer with a strong track record, to serve our investors well in a volatile market,
“This is but the start of a wider partnership that will leverage ADDX’s expertise in alternative investments and OCBC Bank’s wealth management capabilities to provide investors with unique investment opportunities,” she added.
She also noted that more structured products are in the pipeline, and the firm is also exploring the issuance of commercial papers.
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