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CGS-CIMB And ISTOX Roll Out Digital Securities Issuance In S$150-Million Commercial Paper Programme


The CGS-CIMB commercial paper is the first in a new
product line by iSTOX. Commercial papers are a US$1-trillion
market in the US and they are gaining momentum in
Asia.

SINGAPORE, 3 MAY 2021 –
Leading financial services provider CGS-CIMB and
private capital platform iSTOX announced today the issuance
of a short-term debt instrument in the form of digital
securities. The S$150-million (or US$112-million[1]) multi-tranche commercial paper will
be used to fund operating expenses and near-term obligations
of CGS-CIMB. The first tranche of S$10 million was
over-subscribed by accredited individual and corporate
investors[2] on the iSTOX platform.
Investors were offered a 1% per annum interest rate over 3
months. The full S$150-million programme is being carried
out using digital securities, with no traditional issuance
happening alongside the digital channel.

The CGS-CIMB
commercial paper is the first in a new product line of
digital commercial papers by iSTOX, a multi-asset platform
that also facilitates digital issuances for other private
market securities, including funds, bonds and equity.
Commercial papers are short-term debt issued by companies,
with tenures ranging from 1 to 270 days. The commercial
paper market is worth over US$1 trillion in the US and over
US$950 billion in Europe. Asian companies have historically
been more accustomed to raising funds through bank loans or
bonds or through issuing equity, but commercial papers are
gaining momentum.

The CGS-CIMB digital commercial
paper is now listed for trading on the iSTOX secondary
exchange, giving investors the option to cash out ahead of
maturity. The paper matures 3 months from its issuance,
after which investors can decide whether to subscribe for a
fresh 3-month term. If the next tranche is oversubscribed,
subscribers of the current tranche will be guaranteed an
allocation if they choose to roll over their investments.
The 364-day commercial paper programme provides for multiple
tranches over the next few quarters, up to a maximum amount
of S$150 million, a figure that can be increased should the
need arise. Taurus Point Capital Pte.
Ltd.
was the adviser to CGS-CIMB for this
issuance.

iSTOX is a global private market platform.
Using blockchain and smart contract technology, iSTOX
automates manual processes in the issuance, custody and
post-sale management of a security, such as the payment of
dividends or coupons, the real-time tracking of ownership,
and the settling of trades, which happens instantly on the
iSTOX exchange instead of the 2 or more working days needed
by most exchanges.

For investors, the efficiency gains
from tokenisation enables fractionalised ownership, lower
fees and better liquidity. Accredited investors using the
iSTOX platform today come from 24 countries, spanning Asia,
Europe, the Americas (excluding the US), Australia and New
Zealand. For issuers, iSTOX offers a lower minimum
fundraising threshold, lower fees, as well as faster speed
to issuance, which means less uncertainty in a rapidly
changing market.

Carol Fong, Group Chief Executive
Officer of CGS-CIMB, said, “This is the first commercial
paper programme we have done in digital securities form, and
it allows us to tap an alternative source of funding and a
wider spectrum of investors. In working with iSTOX to launch
this programme, we were pleasantly surprised that it was
completed in half the time a traditional issuance would
usually take. Through this collaboration, we are keen to
explore first-hand what digital assets and exchanges might
hold for us as a broker in the future. Digital issuances are
likely to grow and become a strong complement to traditional
capital raising channels.”

Oi Yee Choo, Chief
Commercial Officer of iSTOX, said, “iSTOX is launching
this new product line at a time when the commercial paper
market is expanding both globally and in Asia. Investors
want a full range of products so that each segment of their
portfolio can be deployed in a manner that maximises returns
while diversifying risks. To serve our investors well and
safeguard their interests, we will onboard commercial paper
issuers like CGS-CIMB that are reputable and well-backed,
and have a strong track record and a long history of
operations. In this commercial paper programme, CGS-CIMB as
an issuer was able to realise the maximum benefits of
digital securities because they chose a 100% digital route,
with no traditional issuance carried out alongside it. This
significantly reduced the need to work with multiple
intermediaries, which made the issuance faster and more cost
efficient.”

Oi Yee Choo added, “Commercial papers
are suitable for investors looking for a low-risk cash
management solution. Investors earn a better yield on funds
that are undeployed for various reasons. These may be funds
that are in between investments or that have been earmarked
for an expenditure item in the near term, such as university
tuition fees or a property down payment. Compared with a
fixed deposit at a bank, a commercial paper investment
offers a significantly higher interest rate. It also helps
the investor avoid the risk of incurring a penalty should
there be a need to withdraw funds ahead of maturity –
since the iSTOX exchange can facilitate the sale of the
paper to other investors.”

Michael Tan, Co-Founder
and Executive Director of Taurus Point Capital, said, “We
are excited about reinvigorating the commercial paper
market, which has been overlooked historically in Asia but
now has good prospects of wider acceptance in a digital
form. With current interest rates almost hitting the floor,
commercial papers occupy a sweet spot for both short-term
investors and borrowers. As an adviser, we are delighted to
be able to help CGS-CIMB accomplish this efficiently and to
connect with investors through our partnership with
iSTOX.”

Founded in 2017, iSTOX is fully regulated by
the Monetary Authority of Singapore. The financial
technology company is backed by Singapore Exchange,
Temasek-subsidiary Heliconia Capital and Japan
government-backed investors JIC Venture Growth Investments
(JIC-VGI) and the Development Bank of Japan (DBJ)[3].

About the Issuer, CGS-CIMB
Securities (Singapore) Pte. Ltd.

The Issuer is a
wholly-owned subsidiary of CGS-CIMB Securities International
Pte. Ltd. (“CSI”) , which is a 50-50
joint venture between China Galaxy International Financial
Holdings Limited, a wholly-owned subsidiary of China Galaxy
Securities Co., Ltd., and CIMB Group Sdn. Bhd., a
wholly-owned subsidiary of CIMB Group Holdings
Berhad.

The Issuer has one wholly-owned subsidiary,
CGS-CIMB Research Pte. Ltd. (“CGS-CIMB
Research
”). The Issuer, CSI and CGS-CIMB Research
shall collectively be referred to as
CGS-CIMB”.

CGS-CIMB is one of
the leading integrated financial service providers in Asia.
Through a network of local offices, branches and strategic
partners, CGS-CIMB has direct global presence in over 20
countries, providing a truly Asian perspective. It is
well-positioned as Asia’s leading financial gateway with a
core focus on deep-dive research and in-depth analysis on
equities and financial products.

CGS-CIMB is a
customer-centric firm and focus on value creation for
clients, offering a suite of investment and financial
solutions for retail and institutional clients. Its
businesses include retail broking, institutional equities,
derivatives, prime services, equities research, wealth
management and online broking.

Backed by an
award-winning research team, CGS-CIMB has one of the most
comprehensive research coverage of over 800 Asian stocks.
Its strong research capabilities form the backbone of our
product and service offerings, connecting clients to
opportunities.

About iSTOX

iSTOX is a
future-ready capital markets platform set to usher in a new
era for capital fundraising and investment. Through digital
securities, iSTOX offers a more innovative, flexible,
inclusive, and efficient system for an emerging generation
of investors and issuers. As part of its mission, iSTOX
seeks to enable all users to transact exactly the way they
want to and extends capital market access to a wider segment
of the community. iSTOX is owned and operated by ICHX, which
has been approved by MAS as a recognised market operator
(RMO) and has a capital markets services (CMS) license to
deal in securities and collective investment schemes, and to
provide custodial services. For more information, visit www.iSTOX.com.

[1] Based on inter-bank exchange rate
on the date of this press release

[2] Pursuant to section 4A(1)(a) of the
Securities and Futures Act (Chapter 289) of Singapore, an
accredited investor means, amongst others:

(i) an
individual whose net personal assets exceed in value S$2
million (or its equivalent in a foreign currency), or whose
financial assets (net of any related liabilities) exceed in
value S$1 million (or its equivalent in a foreign currency),
or whose income in the preceding 12 months is at least
S$300,000 (or its equivalent in a foreign currency);
or

(ii) a corporation with net assets exceeding S$10
million in value (or its equivalent in foreign
currency).

[3] Other investors
include Korea’s Hanwha Asset Management, Japan’s Tokai
Tokyo Financial Holdings and Thailand’s Kiatnakin Phatra
Financial
Group.

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