Ashurst advises HSBC as the platform provider to HKMA on the world's first multi-currency digital bond offering
08 February 2024
08 February 2024
Ashurst has advised The Hongkong and Shanghai Banking Corporation Limited (HSBC) on the provision of its digital assets platform – HSBC Orion1 (the Platform) to the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA) in connection with the issuance of a digitally native green bond (Digital Green Bonds).
Amongst a number of key innovations, the Digital Green Bonds are digitally native, in that they have been issued in dematerialised book entry form without the need first to issue them into a traditional central securities depository and subsequently convert the bond into digital format.
The Digital Green Bonds, which are available in USD, EUR, CNH and HKD, are issued by the Government of the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR Government) under its Government Green Bond Programme and are listed on the Hong Kong Stock Exchange. This is the HKSAR Government’s second digital bond issuance building on Project Genesis, which the HKMA conducted in 2021 in collaboration with Bank for International Settlements Innovation Hub Hong Kong Centre to concept-test the issuance of tokenised green bonds in Hong Kong. Ashurst was proud also to have advised on the first HKSAR Government tokenised green bond issuance in February 2023.
HSBC Orion is a novel technological platform using distributed ledger technology developed for use in connection with the issuance of digitally native assets and utilises a private permissioned blockchain with nodes operated by the CMU as the platform operator. Investors who are direct participants of the Platform can hold legal title to the Digital Green Bonds directly.
The Ashurst multidisciplinary and cross-border team was led by financial regulatory partner and Hong Kong managing partner Ben Hammond, London-based bank industry global co-chair Etay Katz and Hong Kong-based debt capital markets partner and global finance, funds and restructuring finance division co-head Jini Lee, assisted by counsel Hoi Tak Leung, senior associate Jamie Jefferson Ng and senior associate Janet Ouyang. The wider team included Hong Kong-based corporate senior associate Sean Ching and associate Do Yeon Kim, regulatory associate Anna He and global markets associate Thomas Yau, and London-based financial regulatory associates Joy Yeh and Clara Yeo.
Commenting on this landmark deal, lead partner Ben Hammond said:
"Our firm is committed to outpacing change by providing our clients with innovative and practical solutions in response to an increasingly complex operating environment. Digitalisation is a megatrend that is going to have a significant impact in the next decade and we are proud to be advising at the forefront of its transformation of the financial markets. We are delighted to be involved in a project with HSBC that demonstrates the capacity of Hong Kong law and regulation to accommodate this cutting-edge financial market innovation, and helps expand the boundaries of what Hong Kong offers as a premier global financial centre."
1 HSBC Orion refers to the distributed ledger technology platform deployed by HSBC to HKMA’s CMU as the Platform Operator for the purposes of, among other things, recording, clearing and settling the Digital Green Bonds.