R3 and its partners Commerzbank, ING, Natixis and Rabobank, have completed a live commercial paper transaction on the euro debt solution application, built on R3’s blockchain platform.
With Natixis acting as the issuer, Rabobank acting as the investor and ING as both the dealer and escrow agent, the trade saw the successful issuance of €100,000 notional, with a one-day maturity.
Commerzbank provided the pilot framework software and distributed ledger network for the trade as well as guidance on regulatory implications.
According to R3, since the project began in last year, participants in the initiative have established an operational structure and worked closely with external legal counsel Allen and Overy to develop a comprehensive legal framework.
Meanwhile, the project participants will continue the development of the solution that is aimed at providing significant benefits.
This offers a streamlined capability for accessing debt whilst bringing greater transparency to the marketplace.
The participants will also benefit from reduced operational costs and risk, as well as being able to deliver intraday settlement finality for their clients, R3 revealed.
David Rutter, CEO of R3, commented: “The issuance and settlement of securities is a complex process and current models are 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.”
Michael Spitz, CEO of Commerzbank’s main incubator, said: "Together with MEAG and KfW Banking Group we successfully completed the first eligible contract participant (ECP) deal via blockchain in September 2017. In the current deal, we benefited from our last years’ experience and are very pleased to contribute to the success of the blockchain ecosystem."
Marnix Bruning, head of money market and central bank sales at ING, cited: “This live trade lays the foundation for dealing ECP more efficiently and cost-effectively. It also marks the start of building an improved distributed ledger platform that enables direct settlement and reduces operational risk and costs at the same time.”
Frédéric Dalibard, head of digital for corporate and investment banking at Natixis, added: “The flawless execution at every stage of this transaction is extremely encouraging, Natixis will continue to work closely with R3 and our consortium partners to push towards a full commercial launch of the solution. It promises impressive advances in operational efficiency, and we are delighted to be involved in this exciting project.”
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