The Philippines' SEC Plans to Launch a New Trading System for Debt Instruments Using DLT in April 2023

The proposal aims to draw the attention of securities firms to trade digital tokens while strengthening the SEC's supervision in the digital era.

The Securities and Exchange Commission (SEC) of the Philippines is preparing to launch a new trading system for debt instruments that will utilize distributed ledger technology (DLT) in April 2023.

This initiative is part of the SEC's broader strategy to facilitate digital token trading by securities firms and enhance the Commission's regulatory oversight in the digital era.

According to Jomkwan Kongsakul, deputy secretary-general of the SEC, there has been a growing interest in digital token investments among various sectors.

To date, the SEC has already approved four digital token projects, with two more currently under review. Among the approved projects, there is a strong focus on tokens that are classified as "green" tokens and those linked to investment-based projects.

Following the SEC's announcement, five additional organizations have expressed interest in engaging in discussions with the Commission regarding fundraising initiatives to create soft power tokens, particularly in the green token sector.

As reported by local media, the SEC is actively working to integrate digital tokens into the capital markets, enabling securities firms to trade these tokens and leverage their extensive investor bases.

"The SEC is harnessing technology to drive efficiency in the capital market by promoting an electronic securities ecosystem," stated Kongsakul.

She also highlighted the upcoming introduction of new regulations to streamline the issuance of electronic securities and facilitate online bond purchases.

Currently, the process of purchasing bonds in the primary market can be lengthy, taking 7 to 14 days before the bonds become available for trading in the secondary market.

Moreover, some bonds are characterized by high prices, low liquidity, and limited accessibility for investors.

However, Kongsakul noted that the utilization of advanced technology will expedite the entire procedure, enhancing accuracy and efficiency while minimizing common errors and delays.

The SEC's comprehensive plan encompasses the digitization of the entire bond trading system, covering both primary and secondary markets, to optimize settlement, trading, investor registration, and return payments.

Securities firms will be granted the flexibility to establish their own DLT infrastructure, provided that it adheres to a standardized framework.

For firms that lack their own infrastructure, the SEC's public chain will be made available at a reasonable cost.

"In the future, there may be multiple chains for trade. But trading through DLT on all systems is connected by a share ledger, which is expected to be completed soon," explained Kongsakul.

This system will accommodate two types of securities: those created natively using DLT (electronic securities) and traditional securities that are converted into a digital format for trading.

The outcome will be fractional trading, lower prices, higher liquidity, real-time trading, and a reduction in settlement issues.

In related news, 21Shares has filed a registration statement on Form S-1 with the SEC to launch an exchange-traded fund (ETF) that will provide exposure to Polkadot (DOT).