A detailed explanation of Harvest Global’s first Hong Kong tokenized fund and the advantages of tokenization
Written by: Bowen, Bailu Living Room
On January 12, 2024, Harvest Global Asset Management announced on its official WeChat account:On December 28, 2023, Harvest International successfully issued the firstTokenChemical Fund.
The tokenized fund completed the filing with the Hong Kong regulatory authorities in November 2023. It is the first fixed-income tokenized fund launched by a Chinese financial institution in Hong Kong with tokenization arrangements. The fund is only for professional investors and invests in high-rated US bonds. Harvest Global Asset Management, a subsidiary of Harvest Fund Management in Hong Kong, is the fund manager, and Meta Lab HK provides tokenization solutions.
With the implementation of the new STO policy in Hong Kong in 2023, more and more traditional financial institutions are beginning to focus on the innovation of tokenized investable products. As one of the earliest responders, Harvest International quickly completed the issuance of tokenized funds, which to a certain extent also shows that fund tokenization will have greater application prospects.
This article is from Bailu Living Room for readersShare and analyze the advantages of Harvest Global Tokenized Funds and Funds and Asset Tokenization, helping readers make better judgments about the future development prospects of this field.
About Harvest Global
In 1999, Harvest Fund Management Co., Ltd. was established, becoming one of the first asset management companies in China. In 2008, Harvest Fund registered a wholly-owned subsidiary in Hong Kong, namely Harvest International Asset Management. Currently, Harvest Fund has a management scale of more than US$200 billion, and its public funds have created returns of more than US$30 billion. It has an investment research team of more than 300 people.
In 2018, Harvest Global established an international team of ESG experts to incorporate quantitative and qualitative ESG research into the investment process; in 2020, Harvest Fund Management was awarded an A+ rating by the Principles for Responsible Investment (PRI) in the "Strategy and Governance" module in recognition of its efforts to incorporate ESG considerations into investment decisions.
The Group's CEO, Xuejun Zhao, holds a PhD in Economics from the Guanghua School of Management at Peking University. He has over 20 years of experience in financial investment, capital market operations and corporate management, and is one of the longest-serving CEOs in China's fund industry. Currently, Xuejun Zhao is a mentor at the Peking University Postdoctoral Research Center and a lecturer for the Executive MBA (EMBA) program at Tsinghua University's PBC School of Finance. He also serves as a part-time vice president of the Asset Management Association of China and a member of the International Advisory Group for Financial Engineering at the Anderson School of Management at the University of California, Los Angeles.
Harvest Global has a long history. The issuance of this tokenized fund is an innovative attempt to quickly respond to the new STO policy in Hong Kong in 2023. Its results are also of great reference significance for later comers to implement similar businesses.
What are the advantages of tokenizing assets and funds?
According to Forbes, Nadine Chakar, who was in charge of the digital asset department of State Street Bank, once said: "Whether it is at BlackRock and Goldman Sachs, or at Citi and JPMorgan Chase, all employees are saying that tokenization is the trend of the future."
What is the potential of asset tokenization?
The first is to improve efficiency: tokenized asset transactions, achieve DvP atomic delivery, shorten settlement time, and reduce delivery and settlement risks.For example, the tokenized green bonds issued by the Hong Kong government at the beginning of this year significantly shortened the settlement process of traditional bond issuance from 5 business days (T+5) to 1 business day. This is the biggest benefit of tokenization that the market and even regulators have recognized so far, and even in the short term in the future.
The second is to improve liquidity. Tokenization can improve the liquidity of assets by dividing assets/increasing trading freedom. However,The practice of increasing liquidity by tokenizing assets and establishing a secondary market has certain difficulties in risk control and investor protection., so this function is strictly limited by regulation.
In addition, tokenization can also save operating costs and enhance compliance, mainly by leveraging smartcontractAutomation, embedding traditional compliance operations into the intelligence of tokenscontractThese functions will be automated, reducing costs.
The response from the global market is also a reflection of the advantages of asset tokenization. Taking Singapore as an example, the Monetary Authority of Singapore (MAS) established the Project Guardian program in November 2022 to conduct pilot projects with large global financial institutions on asset tokenization and DeFi applications. Large financial institutions such as DBS Bank, HSBC, UBS, JP Morgan, Ant Financial, etc. have joined the program and achieved certain results.
Hong Kong has stronger support for the tokenization of assets and investable products, and provides great convenience from a policy perspective.On November 2, 2023, the Hong Kong Securities and Futures Commission published the "Circular on Intermediaries Engaged in Tokenized Securities-Related Activities" and the "Circular on Tokenized SFC-Approved Investment Products".On the one hand, Hong Kong has made new regulations on the issuance of tokenized securities, allowing them to be sold to retail investors; on the other hand, it has regulated the issuance of STO products and formally recognized the launch of tokenized investable products. Hong Kong companies are encouraged to attempt to issue tokenized investable products from a policy perspective.
For more information on Hong Kong’s virtual asset policy in 2023, please refer to:Annual review of Hong Kong’s virtual asset policy in 2023: The dawn of light has emerged
Harvest Global’s Tokenized Fund
The policy encouragement has become a boost for Harvest Global to try to issue tokenized funds. William, chief consultant of Harvest Global Asset Management, gave a brief introduction to the fund in an interview with Hong Kong News Network.
The tokenization arrangement of the fund by Harvest International mainly adopts the public non-permissioned blockchain technology.BlockchainThe ownership and transaction records of fund shares are recorded on the blockchain. Specifically, each Token represents a record of a fund share. After being minted, the Token will be stored in a masterwalletThen, according to the purchase record, it will be transferred to the correspondingwallet地址；同样地在投资者赎回后，相应钱包地址中的 Token 将被转移到销毁地址中，由此在链上形成申赎回记录。用户可通过专门定制的浏览器来查阅相关链上信息。此外，BlockchainAll relevant data on the website have been anonymized and no regulated information will be disclosed. Regulated data are stored in corresponding locations as required by law to meet the legal requirements of Hong Kong.
In terms of privacy protection, the tokenization arrangement of the fund has established a new privacy model. The outside world can often associate the customer's identity information with a wallet address through some clues, resulting in privacy exposure. For example, if the outside world knows that someone holds 1,000 shares of a fund, and there is only one wallet on the chain with 1,000 tokens, the connection between the identity and the wallet can be established, resulting in privacy leakage. To this end, Harvest International adopts a "one-to-many" approach to randomly distribute the fund shares held by an investor to multiple wallets to strengthen the protection of investor privacy.
But at the same time, William pointed out that the issuance of tokenized funds still faces challenges.One is the lack of infrastructure construction for tokenization.For example, currently availableBlockchain开发平台、托管设施等都比较匮乏，部分区块链平台还需要自建和运营节点，导致成本高昂；另一方面，这些区块链平台在标准与兼容性上与传统金融的基础设施存在差异，让传统机构望而却步。
Second, in terms of institutional arrangements, there are still a lot of problems that need to be solved. For example, the blockchain development platformSafetyStandards, arrangements for the secondary market, cross-jurisdictional flows of tokens, etc. are still unclear.
Regardless of the outcome, including the issuance of tokenized green bonds led by the Hong Kong government,It is gradually proving that the tokenization of investable products is likely to become a trend in the future.Hong Kong has prepared a favorable regulatory environment for tokenized innovation. What needs to be done next is to keep an eye on this field and wait for more outstanding institutions to deliver their responses.
The article comes from the Internet:A detailed explanation of Harvest Global’s first Hong Kong tokenized fund and the advantages of tokenization
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