Yesterday the International Bank for Reconstruction and Development (World Bank) and the Commonwealth Bank of Australia (CBA) announced that they’ve enabled the secondary trades of the World Bank’s bond-i bond to be recorded on a blockchain. Nine months ago CBA arranged the Blockchain Offered New Debt Instrument (bond-i) issuance of A$110 million (US $76m). It’s part of the World Bank’s annual $50-$60 billion bond issuance.
“Enabling secondary trading [to be] recorded on the blockchain is a tremendous step forward towards enabling capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions,” said World Bank VP and Treasurer Jingdong Hua. “It speaks to the innovation and commitment of all our partners, including investors, that we were able to achieve this together.”
The bond-i platform is a permissioned network with nodes in Sydney and Washington. It features automated bond auction, bookbuild and allocation. Plus it has electronic bid capture and real-time updates.
Sophie Gilder, Head of Experimentation & Commercialisation, CBA Innovation Labs commented: “Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.” She also mentioned the advantage of transparency.
Microsoft provided an independent code review and IHS Market provided independent valuations.
There’s a large number of projects that focus on bond issuance and trading. JP Morgan is one of the highest profile. Spanish bank BBVA has probably executed the most pilots and variety of debt instruments. Societe Generale issued a bond on the ethereum blockchain. And in Russia, the National Settlement Depositary ran a pilot for a bond redemption.