Banking News

Nomura, NRI to build corporate bonds blockchain

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On the 24th July, Nikkei reported details about Nomura Research Institute (NRI) and Nomura Holdings’ plans for a jointly developed blockchain trading platform. Yesterday we learned that their joint venture, announced last month, will initially be aimed at corporate bonds with other types of securities to follow later. The Japanese firms hope to have their platform in use by summer 2020.

Nomura, an international financial services company, and NRI, an IT service provider and consultancy firm, began collaborating on distributed ledger technology (DLT) in 2015 for equities management. Nomura Holdings owns just over a third of NRI’s shares. Their joint venture to develop a blockchain securities platform is slated to be incorporated next month. Its initial capital will be 2.4 billion Yen ($22 million), and Nomura Holdings will own two-thirds of the shares.

Corporate bonds are often raised in large amounts to reduce the workload that comes with issuing bonds. Currently, the process carries an administrative burden and high costs. NRI and Nomura promise to streamline the entire process.

Using blockchain, information is stored securely and immutably, and the automation can reduce the administration so that issuing bonds for smaller amounts becomes more viable.

The firms have gone with Digital Asset’s smart contract language DAML. In May, NRI India announced they would create capital market solutions with the language and officially partnered with Digital Asset in June.

Nomura, however, is hedging its bets by being involved with various blockchain firms. Along with Digital Asset, it is a governing member of Hedera Hashgraph and an early supporter of R3.

The finance giant has additionally invested in DLT security companies Quantstamp, for smart contracts, and has a joint venture with Ledger for the custody of digital assets. Also announced yesterday, Nomura has funded blockchain-focused fintech firm Omise.

Bond issuance is a popular blockchain application area. A Societe Generale subsidiary recently issued a €100 million ($112m) covered bond on the Ethereum blockchain. Spanish bank BBVA has conducted at least eight blockchain pilots for issuing different types of bonds. In March, the Gibraltar Stock Exchange unveiled a blockchain bond issuance platform. And a year ago, JP Morgan was involved in a Certificate of Deposit issued by the National Bank of Canada.