Rabobank has successfully finished its foremost live Euro Commercial Paper dealing utilizing blockchain technology based platform in a trial conducted in Netherlands. Commerzbank and Euroclear also participated in the trial.
Dutch investors NN Investment Partners and PGGM collaborated with Rabobank Markets in the latest initiative. The trial deal involved multiple issuance of €1 million debt maturing in one week.
Euroclear’s platform recorded real-time payments. For the last two years, Rabobank has been working on the platform and the completion of the trial paves way for full-fledged launch of the service throughout Europe.
Blockchain technology enhances safety, in addition to ability of real-time settlement rather than the usual two business day delay. Earlier, investors had to hold on for two days to get paid after selling debt. With the advent of blockchain technology powered platform, cash is made available instantaneously upon selling commercial paper.
Further advancement of the platform will improve intra-day liquidity for both enterprises and investors. It is trusted that utilizing latest technology will assist companies in standardizing and better administer portfolio risk and cash flow.
Jacek Wieclawski, Head of Capital and Financial Markets Innovation for Rabobank Markets, said “Blockchain technology can boost intraday liquidity for debt securities, meaning our clients can manage their portfolio and liquidity risks in a truly real-time manner.
By leveraging the mix of both blockchain and existing technologies, we managed to create a new market for our clients where public debt securities can be traded and settled instantly while keeping fund managers focused on managing investors’ money in real-time.”
Jurre Halsema, Portfolio Manager, Money Markets at NN Investment Partners, opined that the initiative “can create not only operational efficiency, but also further standardize a high volume market and thereby enhance liquidity and market access for all parties.”
The platform runs on R3’ Corda, an enterprise level blockchain. Across the globe, several financial institutions have successfully issued debt using blockchain technology based platform. A prominent example is India’s Yes Bank and a distinct association of EIB, Santander, Euroclear and EY established two years back.
Likewise, ID2S, a blockchain technology powered Central Securities Depository owned by Citi and Orange, is focused on debt from France based firms. Also, last year, in China, Zheshang Bank disbursed $17 million worth asset backed commercial paper utilizing blockchain.
