6 December 2018 (London) – Enterprise software firm R3, together with partners Commerzbank, ING, Natixis and Rabobank, have announced the completion of a live commercial paper transaction on the Euro Debt Solution application, built on R3’s blockchain platform, Corda. This follows the previous simulated transaction on an earlier version of the solution in September 2017.
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 EUR 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.
Since the project began in 2017, 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. The project participants will continue with the development of the solution that is aimed at providing significant benefits for issuers, offering a streamlined capability for accessing debt whilst bringing greater transparency to the marketplace. Participants will also benefit from reduced operational costs and risk, as well as being able to deliver intraday settlement finality for their clients.
David E. Rutter, CEO of R3, comments: “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. 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.”
Michael Spitz, CEO of Commerzbank’s Main Incubator, comments: “Together with MEAG and KfW we successfully completed the first 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 & Central Bank Sales at ING, comments: “This live trade lays the foundation for dealing ECP more efficiently and cost effectively. It also marks the start of building an improved DLT platform that enables direct settlement and reduces operational risk and costs at the same time. At ING we look forward to our continued collaboration in taking this solution to the next phase.”
Frédéric Dalibard, Head of Digital for Corporate & Investment Banking at Natixis, comments: “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.”
Youssef el Mir, Global Head of STIRT and Commercial Paper Trading at Rabobank, emphasises: “Innovation is playing an ever-growing role in financial markets, and we at Rabobank Markets aim to be at the forefront of these markets. This Commercial Paper pilot trade on blockchain technology opens up new horizons in terms of speed of settlements and clearing, which ultimately will benefit our clients by offering them a more efficient product experience. This trade is a big step towards deploying the blockchain technology. We are tremendously excited to have been part of the execution team.”