HSBC completes first tokenized structured product pilot for institutional investors

HSBC has completed its first blockchain-based issuance of a digitally native structured product, using tokenized U.S. dollar-denominated notes in a private placement for institutional investors in Hong Kong.

According to HSBC, the pilot transaction involved U.S. dollar-denominated structured notes issued in Hong Kong with support from Asia-Pacific digital market infrastructure operator Marketnode, which acted as both the tokenisation agent and digital paying agent.

By issuing the notes directly on blockchain, Marketnode enabled digital issuance while also managing payment flows between HSBC and the investor. HSBC said the pilot tested how tokenisation can make the issuance, settlement, administration, and servicing of structured products more efficient for institutional markets.

Speaking about the transaction, Suvir Loomba, regional head of securities services for Asia at HSBC and a board member of Marketnode, said the issuance builds on the banks digital asset work and demonstrates how it is working with market participants to develop practical blockchain solutions for institutional finance.

Loomba added that tokenisation can simplify multiple stages of a structured products lifecycle, including issuance, settlement, administration, and ongoing servicing.

“As one of the leading issuers of structured products in Asia, we see clear potential for tokenisation to improve the efficiency of issuance, settlement and servicing, whilst creating a more scalable foundation for future product innovation,” HSBCs head of institutional sales for Asia, Patrick Boumalham, said in an accompanying statement.

According to HSBC, the structured product pilot forms part of its digital assets strategy and demonstrates how blockchain technology can be applied to improve capital markets processes for institutional participants.

Hong Kong continues to build tokenised markets

The latest pilot adds to Hong Kongs ongoing push to bring traditional financial products onto blockchain infrastructure.

In June, the Hong Kong Monetary Authority established a tokenized bond expert group after the government issued more than HK$6.8 billion ($868 million) in tokenized bonds across several offerings. The group includes HSBC, JPMorgan Securities, Standard Chartered, UBS, Ant Digital, HashKey Group, and other market participants, and is examining legal frameworks, market practices, and infrastructure needed to expand tokenized bond activity.

HSBC has also continued to strengthen its digital asset presence in the city. In April, the bank became one of the first institutions to receive a Hong Kong Monetary Authority stablecoin issuer license under the citys new regulatory framework, allowing it to issue regulated stablecoins alongside Standard Chartered-backed Anchorpoint Financial.