One of the biggest arms in Russian investment disc and the largest bank in the corporate and investment banking business of Russia, Sberbank CIB implemented the first of its kind blockchain based commercial bond transaction in the country. Joining hands with Russia’s telecoms expert MTS and the National Settlement Depository (NSD) smart contracts have been placed using commercial Rouble-denominated bonds.
The Bond Deal
Sberbank CIB was the main organizer of the event. Sberbank was the main buyer of the issue of MTS bonds. Bonds have the maturity term of 6-months and the total sum of RUB 750 million. The annual rate of the bond in the OTC market stays at 6.8%.
The blockchain bonds technology was completely provided and supported by NSD. A full Delivery versus Payment (DVP) settlement model was based on blockchain bonds. This enabled a laidback transfer of securities and funds simultaneously. It is based on Hyperledger Fabric 1.1 to carry out the transactions.
Commercial bonds are placed on an over-the-counter (OTC) market through the private subscription. These commercial bonds are unsecured fixed-income securities.
The system implemented is highly transparent, including bond placement, circulation and record keeping. The system only operates using digitalized assets making it extremely secure and sheltered.
All the three entities had access to the transaction into the blockchain platform. Including the issuer, the central depository, and the investor. Considering all the obligations and necessities of the Russian legislation in dealing with all the accounts was made necessary. Confidentiality was kept foremost priority in dealings throughout.
All the participants could transfer and exchange the documents online and check the subsequent transaction’s status in the actual time it occurred. The full execution of the deal was able to be seen, from the placement of the bonds to the receiving of the cash.
This collaboration between the MTS and the Sberbank CIB is the first of its nature which enabled blockchains and blockchain bonds to gain the status of an industrial technology which accelerated securities settlement and certified confidentiality.
The initiators claim that the main aim is to an exemplary digital asset accounting infrastructure joining hands with market leaders. Infrastructure plays a crucial role for institutional investors to enter the market and for the increase in market’s capitalism and market’s successful development. The infrastructure plays an essential role in the flourished market growth.
Sberbank has already shown interests in blockchain projects previously. Last year the executive member of the company announced that the bank is in process cooperating with the Russian Federal Antimonopoly Service (FAS) on a project which is on a distributed ledger technology (DLT).
The delay in the project is mainly because of some unsolved and pending matters including some slow interaction of blockchain applicants. The Sberbank CIB has though forecasted great hopes and high expectations from the initiative. He also declared involvement of the bank in further other blockchain based projects.
Sberbank has also announced its blockchain laboratory which will develop blockchain based solutions. It will carry out pilot projects, product prototypes and implement applied business solutions for Sberbank CIB.