iSTOX has reduced the minimum investment size by 10 times.
Private capital exchange iSTOX has issued digital tokents for Temasek-linked Astrea VI private equity bonds this month, the former announced in a press release.
The efficiency gains from tokenisation allowed iSTOX to reduce the minimum investment size in Astrea VI bonds for individual investors by up to 10 times—from US$200,000 to US$20,000—significantly expanding access to the bonds.
The US-denominated tranches were previously open to institutional and accredited investors for a minimum investment of US$50,000 for Class A-2 bonds and US$200,000 for Class B bonds. Class A-2 bonds have an annual interest rate of 3.25%, whilst Class B bonds carry 4.35%.
According to iSTOX, the tokenisation ensures that the benefits of private equity are spread more equally among smaller investors, and is made possible by issuing securities using blockchain and smart contract technology.
Moreover, the speed of the blockchain network reduces transaction costs and allows trades to be settled instantly instead of the usual two working days with traditional exchanges.
iSTOX chief commercial officer Oi Yee Choo noted that digital tokens are transforming the financial markets in a profound way.
“The technology is fundamentally more efficient. Over time, as issuers and investors become better acquainted with digital tokens, we expect market forces to shift much if not all of the global bond market to digital issuances,” she said.