A tokenized bond is still a bond. The risk is not the technology but the fragmentation, a second market with its own liquidity and its own rules. How IDBX avoids it.
A tokenized bond is a bond whose ownership is recorded on a distributed ledger rather than only in a traditional securities register. The issuer, the coupon, the maturity and the credit risk are the same. What changes is the record keeping, and with it how quickly and in what form the bond can settle.
When tokenized bonds trade on their own platforms, with their own liquidity and their own settlement, the market splits in two. The same issuer's debt ends up with two prices, two pools of liquidity and two sets of rules. That is not modernizing a market. It is dividing one.
IDBX is built so tokenized and traditional instruments trade on the same venue, under the same governance, with the same participants. A desk sees both in one place and does not need a second relationship, a second rulebook or a second screen to reach the tokenized version. How IDBX handles tokenization.
Settlement follows the instrument. A tokenized bond can settle on its own rail against an eligible cash leg, and a traditional bond settles on the rail it uses today. IDBX orchestrates each obligation to the infrastructure that should settle it, and the venue is architected to support settlement in central bank money where available.
One venue does not make two rails one. A tokenized bond and its traditional twin that settle on different rails sit in different settlement sets, and IDBX does not net them against each other. Execution can be unified before settlement infrastructure is, and we think that is the right order.
The tokenized bond market is also still young, and its liquidity is thin. A single venue gives that liquidity somewhere to meet the rest of the market, but it cannot create it.
What is a tokenized bond?
A bond whose ownership is recorded on a distributed ledger. Its economics and credit risk are the same as the traditional bond.
Is a tokenized bond a new asset class?
No. Why tokenization is not a new asset class.
Can tokenized and traditional bonds trade on the same venue?
On IDBX, yes. They trade side by side under the same governance.
Do they net against each other?
Only if they settle on the same rail, in the same currency, on the same date.