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Four European banking giants, Commerzbank, ING, Natixis, and Rabobank, along with enterprise blockchain software firm R3, have successfully executed a live commercial paper transaction on the Euro Debt Solution application built on R3’s Corda blockchain platform.
The trade saw the successful issuance of EUR 100,000 notional, with a one-day maturity. It follows a previous simulated transaction on an earlier version of the solution in September 2017.
For the live trade, Natixis served as the issuer, Rabobank was the investor, and ING was both the dealer and the escrow agent. On its part, Commerzbank provided the pilot framework, software and distributed ledger network for the trade as well as guidance on regulatory implications.
By using blockchain technology, the project members aim to provide significant benefits for issuers, offering a streamlined capability for accessing debt whilst bringing greater transparency to the marketplace. The solution will also help cut operational costs and risk, and enable participants to deliver intraday settlement finality for their clients.
David E. Rutter, CEO of R3, said that the issuance and settlement of securities is a complex process, which is currently rife with inefficiency.
“Corda addresses these challenges by enabling parties to financial agreements to record them once and collaborate to maintain accurate, shared records of these agreements. The successful live trade on the Euro Debt Solution not only demonstrates that blockchain provides clear advantages over existing processes but marks the next step towards a production-ready solution on Corda,” Rutter added.
According to the official release, the project participants plan to continue with the development of the solution.
Marnix Bruning, Head of Money Market & Central Bank Sales at ING, said that the live trade “marks the start of building an improved DLT platform that enables direct settlement and reduces operational risk and costs at the same time.”
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