CGS-CIMB & iSTOX Roll Out Digital Securities Issuance in S$150-Million Commercial Paper Programme
The world’s largest digital securities issuance programme in a world-first milestone for the token economy. CGS-CIMB and iSTOX (a subsidiary of the iSTOX Group) have rolled out the world’s largest digital securities issuance programme in a world-first milestone for the token economy. The strategic partnership between CGS-CIMB, iSTOX, and STASIS, will see the issuance of tokenized “security” backed by commercial paper (CP) in a joint fundraising exercise.
Starting with Singapore’s regulated digital securities issuances, CGS-CIMB and iSTOX have integrated their platforms to deliver a seamless and cost-effective digital securities issuance experience that is compliant with relevant securities laws and regulations. CGS-CIMB will continue to work with the Monetary Authority of Singapore (MAS) and iSTOX with the Financial Services Agency (FSA) to bring this new digital securities issuance to the Japanese market with the same compliance standards in place.
Leading financial services provider CGS-CIMB and private equity platform iSTOX today announced the creation of a short-term debt instrument in the form of digital securities. The $150 million (Singapore dollars or US$112 million) multi-tranche commercial paper will be used to fund CGS-CIMB’s operating expenses and short-term debt. The first tranche of $10 million was oversubscribed by accredited individual and corporate investors on the iSTOX platform. Investors were offered an interest rate of 1% per annum for 3 months. The entire $150 million program will be delivered via digital titles, with traditional programming not delivered in parallel with the digital channel.
The CGS-CIMB commercial note is the first in the new series of digital commercial notes from iSTOX, a multi-asset platform that also offers digital securities in other private markets, including funds, bonds and equities. Commercial paper is short-term debt issued by companies with maturities ranging from 1 to 270 days. The market for commercial paper is worth over $1 trillion in the United States and over $950 billion in Europe. Traditionally, Asian companies have been more used to financing themselves through bank loans, bonds or issuing shares, but commercial paper is gaining ground.
CGS-CIMB’s digital commercial paper is now listed on the iSTOX secondary market, offering investors the opportunity to cash out before maturity. The paper has a maturity of 3 months from issuance, after which investors can decide to subscribe for a further 3 months. If the next tranche is oversubscribed, current tranche bidders are guaranteed an allocation if they choose to renew their investment. The 364-day commercial paper program has several tranches in the coming quarters for a maximum amount of A$150 million, which can be increased if necessary. Taurus Point Capital Pte. Ltd. acted as counsel for CGS-CIMB in this case.
iSTOX is a global platform for the private market. Using blockchain technology and smart contracts, iSTOX automates the manual processes of issuing, holding and managing a security after it has been sold, such as. B. Payment of dividends or coupons, real time tracking of properties and transaction processing that is immediate at iSTOX instead of the two or more business days required by most exchanges.
For investors, the greater efficiency of tokenization allows for fractional ownership, lower costs, and greater liquidity. Today, the iSTOX platform is used by accredited investors from 24 countries: Asia, Europe, America (excluding the United States), Australia and New Zealand. For issuers, iSTOX offers a lower minimum fundraising threshold, lower costs and faster issuance speed, which means less uncertainty in a fast-moving market.
Carol Fong, executive director of CGS-CIMB, said: This is the first commercial paper program we have done in digital form, and it allows us to tap into an alternative source of funding and a broader investor base. When we partnered with iSTOX to launch this program, we were pleasantly surprised that it was completed in half the time of a traditional program. Through this partnership, we want to experience first-hand what digital assets and trade shows can offer us as brokers in the future. Digital issues are likely to grow and become a strong complement to traditional channels for raising capital.
Oi Yee Choo, business manager of iSTOX, said, iSTOX is launching this new product line at a time when the commercial paper market is growing both globally and in Asia. Investors want a full range of products so that each segment of their portfolio can be used to maximize returns while diversifying risk. To serve our investors well and protect their interests, we will resort to commercial paper issuers such as CGS-CIMB, who enjoy a strong reputation and support, have a solid track record and a long corporate history. In this commercial paper program, CGS-CIMB, as the issuer, was able to make the most of digital securities by going 100% digital, without traditional issuance. This has greatly reduced the need to work with many intermediaries, making production faster and cheaper.
Oi Yee Choo added: Commercial paper is suitable for investors looking for a low-risk liquidity management solution. Investors enjoy higher returns on non-deposit funds for several reasons. For example, it may be funds located between investments or earmarked for an expenditure item in the near future. For example, tuition fees or a down payment on a house. Compared to a term deposit with a bank, commercial paper investments offer a significantly higher interest rate. It also allows investors to avoid the risk of being penalized if they need to withdraw their funds early – as iSTOX can facilitate the sale of securities to other investors.
Michael Tan, co-founder and CEO of Taurus Point Capital, said: We are delighted to be able to revitalise the commercial paper market, which has been historically neglected in Asia but now has good prospects for wider digital adoption. With interest rates at their lowest levels, commercial paper is well positioned for short-term investors and borrowers. As consultants, we are delighted to be able to help CGS-CIMB carry out this task effectively and connect with investors through our partnership with iSTOX.
iSTOX was established in 2017 and is fully regulated by the Monetary Authority of Singapore. The financial technology company is backed by the Singapore Stock Exchange, Temasek subsidiary Heliconia Capital, and investors JIC Venture Growth Investments (JIC-VGI) and Development Bank of Japan (DBJ), both backed by the Japanese government.
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Frequently Asked Questions
How do I open a CGS-CIMB account?
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How do you use CGS-CIMB?
As a Malaysian exchange, we have a lot of people asking us how to use CGS-CIMB. We’ve also seen many people asking about job opportunities at CGS-CIMB. Since both of those are common questions, we figured we’d make a blog post that goes over both. Many people don’t understand the concept of cryptocurrency, or even know what it is for. So, we’ve put together a brief guide to help you understand how Cryptocurrency works. While most cryptocurrencies are built on blockchain technology, they still vary when it comes to their features and goals. CGS-CIMB was created to be a currency for everyone, regardless of location, age, or gender. It’s built to be a one-stop shop for all things cryptocurrency. (You can learn more about CGS-CIMB in our whitepaper.)
What is trading limit in CGS-CIMB?
The trading limit is a maximum amount of cryptocurrency that can be bought or sold in a single order. Once a trader has set a trading limit, this limit will apply to all orders created and will prevent the user from buying or selling more than the limit. Factors that affect the trading limit are the account currency, the payment currency, and the available balance. The digital currency world can be a fun and exciting place, but if you’re new to the space, it can also be daunting. There are numerous new terms and concepts to get to grips with, and many people don’t know where to start. One of the most basic things you’ll need to understand to get started with digital currency is trading limit.