Asset-Backed Securities on a Blockchain: JD Finance’s New Plan
JD Finance aims to issue the securities employing a consortium blockchain that will see each party act as a node, transparently recording the transactions. The experiment sets out to ascertain if the blockchain can satisfy the requirements of the various parties involved with the asset securitization process, such as issuers, underwriters, and buyers.
As reported by a neighborhood news source, the firm issued an automobile loan in August 2017 with a blockchain platform, marking the firm’s initial trial in incorporating distributed ledger technology to its fiscal services.
The financial services firm rolled out its traditional, non-blockchain ABS merchandise in 2015, in addition to an online service which helps other companies to increase capital by using their issuance. This usually happens in the form of a portfolio of loans or credit card debts which can be farther traded on the secondary market.
JD Finance, a subsidiary of Chinese e-commerce giant JD.com, announced on Wednesday that it is planning to issue asset-backed securities (ABSs) to a blockchain.
JD.com also announced in April that it would establish a proprietary blockchain-as-a-service platform that year, in line with other technology giants including Huawei, Oracle, IBM, and Microsoft.
According to a story in the Securities Times, a socket of the China Securities Regulatory Commission, JD Finance established the trial in partnership with Huatai Securities, a brokerage firm that will underwrite the issuance, as well as Xingye Bank, which will act as a trust.