Today National Bank of Canada issued a Certificate of Deposit with JP Morgan as the sole dealer. There was a parallel simulation of the issuance using an application created by JP Morgan. The software uses the Quorum flavor of Ethereum developed by the investment bank.
“Blockchain-related technologies have the potential to bring about major change in the financial services industry. This is a unique opportunity for us to expand our knowledge of blockchain,” said David Furlong, Senior VP of AI, Venture Capital, and Blockchain at National Bank of Canada.
The app covers the full life cycle of debt. So it deals with origination, distribution, execution, settlement, interest rate payments, and maturity repayments. The bond has a one-year maturity which is convenient for testing. For market data, the app uses the Thomson Reuters data oracle BlockOne IQ for Quorum. Both National Bank of Canada and JP Morgan are members of the Enterprise Ethereum Alliance.
Goldman Sachs Asset Management (GSAM), Pfizer, and Western Asset were some of the investors in the debt.
David Fishman, Head of GSAM’s Liquidity Solutions business said: “We’re excited to have the opportunity to learn from this test and to help develop more efficient ways of trading, from providing more transparency to streamlining processes and minimizing transaction costs.”
Christine Moy is taking over the role of Quorum lead from Amber Baldet who is leaving for a startup. Moy commented, “This is an exciting example of how JP Morgan leveraged our combined capabilities in capital markets and blockchain technology, delivering results to a diverse set of clients.”
As previously reported, JP Morgan is considering spinning off the Quorum unit because enterprise clients need support, which is not a bank sweet spot. The risk is that the uncertainty and delay could dissuade companies from adopting the technology.