Dutch banking and financial services company Rabobank has executed 19 real-time Euro Commercial Paper transactions, the first of their kind, in its biggest blockchain pilot to date.
The transactions were sent from Dutch State Treasury Agency and Rabobank Treasury and Austria-based Erste Bank, and received by Northern Trust Asset Management in the UK.
The Netherlands Authority for Financial Markets and other European regulators had access to the blockchain, providing an insight into how the technology could be leveraged in regulatory efforts.
The pilot saw more than €40 million in notional, one-week maturity Euro Commercial Papers executed in a fixed and floating format. Securities were issued from the existing commercial paper and certificate of deposit funding programmes of participating borrowers, with assigned individual XS-ISIN codes.
The execution, distribution and settlement of these transactions occurred within 30 minutes, offering almost real-time liquidity to Northern Trust Asset Management for publicly issued and traded debt securities on both the primary and secondary markets.
The ‘real-time’ settlements were achieved through Rabobank’s private-permissioned, ledger-based platform, which was integrated into operational flows and front-to-back risk systems. This reduces the time and cost of operations.
Securities were issued in and settled against fiat cash on Euroclear Bank’s infrastructure, harmonised with the issuing and paying agents on their own infrastructures, and sent to Tradeweb’s electronic trading venue.
Youssef el Mir, global head of trading at Rabobank, says: “We believe the digitisation of money markets can enhance liquidity and transparency at a critical time for the asset management industry. These latest transactions, and the solution we’ve worked collaboratively to deliver, prove that blockchain technology can be smoothly and seamlessly integrated in financial institutions’ legacy systems with the right approach.”
Philippe Verriest, head of innovation, research and development at Euroclear, comments: “The pilot successfully resulted in a large reduction in eligible contract participant instrument issuance and settlement processing times while also providing near instantaneous liquidity to the issuer. In our role as a financial market infrastructure, we are here to support and collaborate with the market in the development of pioneering technologies that will drive real efficiencies.”
