Capital markets News

Bank of Montreal pilots blockchain fixed income issuance


Yesterday BMO Capital Markets announced it had successfully executed a blockchain pilot for a fixed income issuance. The conventional transaction was mirrored on a blockchain platform.

Bank of Montreal is the issuer and the investor is the Ontario Teachers’ Pension Plan. The issuance was a CDN$250 million one year floating rate Deposit Note.

BMO said the goal was to test a next generation settlement system. Both parties were able to view the transaction on the blockchain and verify the term sheet data and payment amounts. The objective is to cut costs in multiple areas including compliance, reporting, security clearing, and settlement of cash transactions.

BMO intends to extend the pilot by partnering with other clients and institutions.

“This is an important first step in developing a fully functional blockchain capability that we think will eventually allow primary and secondary trading of securities,” said Kelsey Gunderson, Head of Global Trading, BMO Capital Markets.

Other blockchain lending initiatives

Last week Commonwealth Bank of Australia announced plans for a World Bank bond issuance that will purely be on a blockchain.

Earlier in the year JP Morgan ran a test with the National Bank of Canada. Spanish bank BBVA has issued more than one type of corporate debt, and Russia’s largest bank, Sberbank, placed a commercial bond using blockchain.

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