Sberbank has Completed its First Blockchain-Enabled Commercial Bond Transaction
Blockchain-enabled commercial Bonds
Russia’s Sberbank through its Corporate and Investment banking business section Sberbank CIB successful conducted its first blockchain-based commercial bond transaction in Russia. The bank announced n 16th May that the transaction was done in partnership with MTS the biggest telecoms operator in Russia and the National Settlement Depository.
MTS corporate bonds were organized at a value of 12 million dollars with a six-month maturity using smart contracts. The transaction was done on the Hyperledger Fabric 1.1-based blockchain which was provided by NSD. Commercial bonds are income securities which are unsecured. They are issued by a company and placed on an over-the-counter market generally through private subscription. The model has now been implemented using blockchain in order to conduct the transaction in a complete Delivery versus payment settlement model which have made the transfer of both the money and the bonds simultaneous.
In this platform, all the involved parties receive access to the blockchain platform to carry out the transaction which led to transparency and confidentiality meeting all the requirements set forth by the Russian law. The use of Blockchain fastened the process since each participant share documents online and had the ability to track the transaction status in real time.
According to the Senior Vice President of Sberbank who is also the head of Sberbank CIB Igor Bulantsev:
“The MTS bond issue confirmed to us that Blockchain is very reliable, efficient and secure which can be used to carry out complex transactions involving securities. The technology also demonstrated its potential which can help in the development of Russia’s digital economy.”
On his part, Eddie Astanin the Chairman of the Executive Board of NSD noted that: “NSD was among the very first companies to adopt Blockchain in Russia. We started working on a prototype platform to help in a bond transaction in the First Quarter of 2017. However the deal with MTS and Sberbank mas massive and shows that Blockchain technology can provide speed and confidentiality when working with securities.”
Eddie added that the main aim of the company is to develop an infrastructure which can record digital assets in partnership with the market leaders. In December 2017 the first government-level blockchain was implemented. During that time Sberbank also announced that it was working on a partnership with Russia’s Federal Antimonopoly Service to start a document transfer and Storage platform using Blockchain Technology.
Russian State Duma Committee for Legislative Work has also supported a bill about Digital Financial Assets. According to the head of the Legislative Work Committee Pavel Krasheninnokov: ‘This bill aims to reduce the existing risks of using digital objects for transferring assets into unregulated fields for the legalization of bankruptcy fraud, sponsoring of terrorist groups and criminal incomes.”