EvergreenHub: Navigating Bond Tokenisation

Digital Bond Knowledge Repository

As an international financial centre and a major bond hub, Hong Kong stands to benefit from embracing innovation and adopting technologies that can generate efficiency gains, reduce costs, enhance transparency and facilitate investor participation in the bond market. The HKMA embarked on Project Evergreen in 2021 to explore, demonstrate and advance the application of tokenisation technology in capital markets. We started with Project Genesis in collaboration with the Bank for International Settlements Innovation Hub Hong Kong Centre, which concept-tested the issuance of tokenised green bonds in Hong Kong. Building on Project Genesis, we took bond tokenisation beyond proof-of-concept by successfully executing two real-money tokenised green bond issuances for the HKSAR Government since 2023.

This repository shares the HKMA’s experience and hosts related materials that market participants may reference, spanning across the technological, legal and operational aspects of digital bond transactions.

Project Evergreen: HKMA’s Journey

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2021:

Project Genesis: Proof-of-concept of tokenised bonds
- Concept tested the issuance of tokenised green bond in Hong Kong, in collaboration with the Bank for International Settlements Innovation Hub Hong Kong Centre
- Laid solid foundation for subsequent real capital markets transactions
More information:

Project Genesis: A Vision for Technology-driven Green Finance

Prototype report

Prototype walk-through video can be viewed here

Prototype report

Prototype walk-through video can be viewed here

Feb 2023:

1st tokenised issuance: First tokenised government green bond in the world

Key highlights:

Proved the compatibility of Hong Kong’s legal and regulatory framework in supporting innovative forms of bond issuance
Completed the full set of bond lifecycle events using DLT, from primary issuance to secondary trading settlement, coupon payment and maturity redemption
Shortened the settlement cycle for primary issuance from the typical T+5 to T+1

More information:

	Press release, 16 February 2023 HKSAR Government’s Inaugural Tokenised Green Bond Offering
	inSight, 16 February 2023 Eddie Yue on Tokenised Bond: Huge Potential to be Unlocked
	Report, 24 August 2023 Bond Tokenisation in Hong Kong

Feb 2024:

2nd tokenised issuance: First multi-currency digital bond in the world

Key highlights:

Matched the benchmark sizes of many conventional issuances with an aggregate issuance size at around HK$6 billion equivalent in four major currencies (HKD, RMB, USD, EUR)
Attracted subscription from a wide spectrum of global investors, ranging from asset managers, banks, insurance companies, private banks, to non-financial institutions
Streamlined issuance process, adopted machine-readable language and enhanced on-chain accessibility to green bond information

More information:

	Press release, 7 February 2024 HKSAR Government’s Digital Green Bonds Offering
	[External resource] Supplementary Offering Memorandum of HKSAR digital green bonds offering, 8 February 2024

Continue to scale tokenisation in capital markets:

Promote adoption of what’s viable, while pushing the boundary of what’s possible
To fully unlock the potential of tokenisation, the HKMA will continue to promote adoption of the technology in capital markets, and explore further innovation with partners.

Building on the success of the two tokenised government green bond issuances, the HKMA is facilitating wider adoption with the:
- Digital Bond Grant Scheme
- EvergreenHub, a digital bond knowledge repository

Digital Bond Grant Scheme

The HKMA’s Digital Bond Grant Scheme offers issuers with a maximum grant of HK$2.5 million for each eligible digital bond issuance in Hong Kong.

Please refer to the Guideline on the Digital Bond Grant Scheme for details.

The Why and How of Bond Tokenisation

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Why - potential of tokenisation in transforming the bond market

	Eddie Yue on Tokenised Bond: Huge Potential to be Unlocked (February 2023, HKMA)
	[External resource] Georgina Lok on Hong Kong’s Tokenised Green Bonds (April 2024, ICMA)
	[External resource] Georgina Lok on Hong Kong’s Tokenised Green Bonds Pave the Way for Broader Technology Adoption (July 2024, OMFIF)
	[External resource] Georgina Lok on Hong Kong as a Digital Assets Hub (October 2024, OMFIF)

How - key considerations and options in structuring digital bonds, and reference materials for digital bond issuers

	HKMA paper on Bond Tokenisation in Hong Kong (August 2023, HKMA) - The HKMA shared the experience of issuing the inaugural tokenised government green bond in this report, laying out the options and considerations of a tokenised issuance from technology, deal structuring and legal and regulatory perspectives. The market can view this as a blueprint for future similar issuances.
	[External resource] Considerations for risk factors and disclosure in DLT bond offering documents (November 2023, ICMA) – The International Capital Market Association analysed the offering documents of DLT-based debt securities across various jurisdictions including Hong Kong, with a view to identifying potential areas of convergence related to the scope and nature of risk factors and other disclosure.
	[External resource] Offering document of the HKSAR Government’s multi-currency digital green bonds offering in February 2024
	[External resource] Offering document of the Hongkong and Shanghai Banking Corporation Limited’s Digitally Native Notes issuance in September 2024

Videos and Podcast

“HKMA Digital Green Bond Issuance” session at ICMA’s Fintech and Digitalisation Forum (September 2024)

“Digital Green Bond Issuance and Bond Data Taxonomy” Webinar for ICMA (June 2024)

“Innovations in Green Bond Market Development: Digital Green Bond Issuance” Webinar for The Alliance for Green Commercial Banks (April 2024)

“Tokenizing the Environment: Green Bonds and the Digital Asset Revolution” panel discussion at HK Green FinTech Summit (March 2024)

“HKMA Explores Tokenisation with Green Bond Experiment”: Kenneth Hui, Executive Director (External), HKMA, podcast for OMFIF (August 2023)

Related Information

inSight Article(s)

Other Topics about Bond Market Development

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Last revision date : 18 December 2024

EvergreenHub: Navigating Bond Tokenisation Digital Bond Knowledge Repository

EvergreenHub: Navigating Bond Tokenisation

Digital Bond Knowledge Repository