SEBI launches pilot for tokenised corporate bonds
The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) launched the Demat 2.0 pilot for tokenised corporate bonds on Thursday in Mumbai, testing new technology for bond issuance and trading.
India's Securities and Exchange Board (SEBI) and the Reserve Bank of India (RBI) launched a new pilot called Demat 2.0 on Thursday, focusing on the tokenisation of corporate bonds. The initiative aims to test a new method for issuing, holding, trading, and settling corporate bonds using distributed ledger technology (DLT) and the RBI's wholesale central bank digital currency (CBDC) for the funds leg of transactions.
Three issuers – REC, Larsen & Toubro, and IIFL – have already issued a total of Rs 1,025 crore (approximately $125 million) in tokenised bonds under the pilot. Demat 2.0 does not create a new asset class; the bonds retain their existing legal and regulatory characteristics, while the technology used for recording ownership and settling transactions changes.
Under the new system, a corporate bond is created as a native digital token on a private DLT network. This token retains all the bond's details, including its ISIN, coupon rate, and maturity date. The technology also enables the use of smart contracts for automated functions, such as coupon payments.
The system connects the securities leg with the RBI's wholesale CBDC, enabling atomic delivery versus payment (DvP), meaning the security and the money move together. SEBI plans a phased rollout, with the first stage focusing on issuance and the second on secondary market trading. The pilot is being conducted under SEBI's Regulatory Sandbox.