The Elated Bank and the Commonwealth Bank of Australia (CommBank) have teamed up to enable recording of secondary market bond merchandise using blockchain tech.
The institutions announced Wednesday that their successful recording of a secondary transaction for bond-i, a blockchain-operated beholden instrument, on a distributed ledger shows the “vast potential” of the technology, and marks the first bond to have both issuance and swap recorded on a blockchain platform.
Bond-i was first issued last August by the World Bank, with the CommBank being a solitary arranger. The experiment helped the World Bank raise $81 million at the time.
World Bank vice president and treasurer, Jingdong Hua, hinted:
“Enabling secondary trading recorded on the blockchain is a tremendous step forward towards enabling capital markets to leverage ordered ledger technologies for faster, more efficient, and more secure transactions.”
The blockchain platform was built and developed by the CommBank’s Blockchain Cluster of Excellence on top of the ethereum network, and was reviewed by Microsoft regarding its architecture, security and resilience.
CommBank Innovation Labs’ administer of experimentation & commercialization, Sophie Gilder, commented:
“Blockchain has the potential to streamline processes for raising capital and trading refuges, improve operational efficiencies, and enhance regulatory oversight.”
CommBank first revealed a plan to issue a bond through a blockchain system as far back as 2017, saying it was working with an unnamed “major world issuer.”
Other monetary institutions across the globe have been recently testing blockchain-based systems for bond issuance, including Santander, Societe Generale and Abu Dhabi-headquartered Al Hilal Bank.
Sphere Bank image via Shutterstock