The Asian Development Bank (ADB) conducted a blockchain proof of concept to enable the cross border settlement of bond transactions, concluding that the technology is fit for purpose. The Project Tridecagon trial was part of a goal to support delivery versus payment for cross border bond transactions across the ASEAN+3 region, where the ‘+3’ represents China, Japan and Korea.
The conclusion was that if regulations were adapted to support blockchain, there would be cost and time savings. However, the project insisted on compliance with current laws leading to a different cost outcome.
While delivery versus payment (DvP) for securities settlement is the practice in most of the jurisdictions domestically, it isn’t for cross border bond trades, which settle in two days (T+2). Funds are sent via the correspondent banking network, and the delay creates significant risk.
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