This week Russia’s largest bank, Sberbank, placed a commercial bond using blockchain. The RUB 750 bln bond is for MTS, a Russian telecoms company, and used the National Settlement Depository’s (NSD) blockchain.
Bonds of this type are placed and traded in the over-the-counter market. The blockchain allows for the simultaneous transfer of securities and money. Hence the transaction involved the entire life cycle using smart contracts: they place the bond, the issuer performed its obligations, and settlement was made in roubles.
Each participant was able to exchange documents online and track the progress of the transaction. Because of the on-ledger settlement, the transactions were faster than usual. Moreover, the bond placement, circulation, and record-keeping are highly transparent.
The NSD’s blockchain uses Hyperledger Fabric 1.1. The organization which is a member of the Hyperledger project published the smart contract on Github.
The issuer, central depository, and investors received access to the decentralized platform to carry out the transaction.
Igor Bulantsev, Senior VP of Sberbank and head of the investment arm CIB commented: “This MTS bond issue allowed us to confirm the reliability, efficiency and secure nature of the blockchain platform and carry out complex structured transactions involving securities.”
The NSD has multiple blockchain projects, including a platform to allow corporate shareholders to vote.
Last year Solidium created a blockchain for issuing insurance Catastrophe Bonds using Multichain. Separately, just under a month ago JP Morgan used their Quorum platform to issue a Certificate of Deposit for National Bank of Canada.