Gilbert + Tobin’s Special Counsel and Debt Capital Markets lead, Louise McCoach discusses key features of Distrubted Ledger Technology (DLT) and how it has been practically applied in Australia to date with respect to bond issuance.
Why is DLT being explored for Bond Issuance in DCM?
Louise McCoach: Debt capital markets is one of the first cabs off the rank for exploring DLT technology. One of the reasons for this is that the documentation is very standard, as well as the transactions involved in the issuance process. It lends itself very well to smart contract technology and also leaves scope for huge gains and efficiency if blockchain can be successfully implemented.
What pilot projects have used DLT?
Louise McCoach: One of the leading pilot programs that was launched in Australia involved the Bondi platform, which was a collaboration between CBA and the World Bank. It was one of the world's first examples of using blockchain technology to manage, allocate, and issue, bonds on the blockchain.
What benefits can a DLT platform bring?
Louise McCoach: One of the key benefits that DLT technology can bring to the Debt Capital Markets is it's the ability to reduce the number of players involved in the chain of transactions. This allows investors and issuers to transact directly with each other, cutting out more inefficient processes and also reducing the cost and lead time to market.
What are the barriers to future progress?
Louise McCoach: One of the issues which the pilot programs, both in Australia and globally, are navigating, is the challenge of incorporating payment rails into the Debt Capital Market transactions on the blockchain. This is an ongoing challenge, and unlocking this will be one of the keys to creating scale in this market.