Custody bank Northern Trust is testing the trading of fractionalized bonds on a blockchain.

Working with Singapore-based debt markets company BondEvalue, the bank is providing asset servicing for large, high-grade bonds that will be tokenized and divided for retail investors on Hyperledger Sawtooth. These bonds arenormally too large for individual investors, but the quality of the bonds is attractive.

The move shows Northern Trusts continued interest in the technology after it developed thensoldits private equities blockchain, which shortens the time to market for new high-tech private equity funds. With $124.3 billion in assets, Northern Trust is the 24th largest bank in the U.S.

Were building capabilities we feel will be reusable across multiple asset classes and multiple jurisdictions, Justin Chapman, global head of market advocacy and innovation research at Northern Trust, said of the new bond pilot. Our focus on this initiative is to help bring the exchange to life and then we offer the highest grade asset servicing capability in that digital environment.

Through the Monetary Authority of Singapores Sandbox Express, BondEvalue was given permission to launch a blockchain-based bond exchange in Singapore. Northern Trust will custody tokenized bonds and conduct transactions with the regulators oversight.

If the pilot is successful, the bank plans to also participate in the development of BondEvalues business model.

Northern Trust image via Shutterstock

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Northern Trust Testing Fractionlized Bonds on Blockchain - Coindesk