The European Investment Bank (EIB), Euroclear, Banco Santander and EY have completed a Proof of Concept for the issuance and settlement of European Commercial Paper (ECP).
The aim is to cut down on the back and forth in communications and reconciliations by having a shared data source, and there will be Delivery versus Payment (DvP) settlement. Additional benefits included transparency, traceability and faster issuance.
“On the occasion of the first anniversary of the EIB Blockchain Challenge, we would like to thank all actors for their participation in the proof of value exercise for this innovative initiative,” said Peggy Nylund Green, Director of Planning and Settlements of Operations, EIB. She added: “EIB launched it, in our supportive role in the development of the EU internal market and will be pleased to see further innovations in the ECP market.”
The winner of that challenge was EY, which is now implementing the project. The next step will be to develop a pilot and other banks have requested to join.
“This proof of value further validates the potential impact of blockchain technology on the securities issuance process, where there is a huge opportunity to introduce efficiencies, reduce time-to-market and improve the experience for issuers and investors,” said John Whelan, Head of Digital Investment Banking at Banco Santander.
In January, Commerzbank ran a blockchain money market transaction in a pilot between Continental and Siemens. For that transaction, the bank simply acted as platform and service provider. Two weeks later it announced a proof of concept for a repo transaction with Deutsche Börse which also involved DvP settlement.