JD.com will soon be issuing asset-backed securities also known as (ABSs) on the block-chain. JD finance which is a subsidiary of China-based e-commerce giants JD. Com made this announcement on Wednesday amid excitement from speculators and commentators. An outlet of the Chinese regulatory commission known as Securities times revealed in a report that JD finance had reached deals with brokerage firm Huatai securities and Xingye Bank who will underwrite issuance and act as a trust respectively. JD finance will then issue the securities with the help of a consortium block-chain where each party involved will play the role of a node and will oversee transparent transactions.
Issuance of securities using the block-chain is unprecedented and the action by JD finance will be a grand test. This test aims to ascertain whether the block-chain is able to satisfy the demands of various parties involved in the process of asset securitization. These parties include buyers, underwriters, and issuers. JD finance had initially rolled out a non-block-chain ABS product back in 2015 and along with it came a digital service that helped companies raise funds after their issuance.
These funds are raised through credit card debt or a loans portfolio that can be traded further in the secondary marketplace. An automobile loan was also issued in mid-2017 with the help of a block-chain platform which was the firm’s first trial of incorporating ledger technology in its financial services. JD.com has lately announced plans to follow in the footsteps of tech giants IBM, Oracle, Huawei and Microsoft in unveiling a proprietary block-chain as a service platform within the year.
JD.com will soon issue asset-backed securities on the block-chain. To make this happen, they have penned deals with Xingye Bank and Huatai securities in a move that will be unprecedented. If things go smoothly then these will become yet another block-chain related success story.
