Swiss multinational financial services Credit Suisse and Dutch financial service ING successfully completed the first live transaction in securities on Corda, the R3 blockchain platform. As stated in the press release of Credit Suisse, the value of the transaction was 25 million euros (approximately 30 million USD).
Credit Suisse and ING transferred the legal ownership of Dutch and German government securities on the HQLAX Corda-based collateral lending application using HQLAX Digital Collateral Records (DCRs).
The transaction occurred by transferring the proprietary rights of HQLAX DCR-linked accounts containing “baskets of securities” through the R3 blockchain. The conventional style of doing this earlier was to transfer the individual securities themselves.
According to the press release, the use of DCRs for transferring securities can “ultimately help enhance regulatory transparency, mitigate systemic risk, reduce operational risk, and help financial institutions manage capital more efficiently.”
The press release of Credit Suisse states the involvement of Clifford Chance law firm for a DCR-based transfer of the ownership of securities by developing a legal framework.
In the ING press release, the head of ING’s Wholesale Banking Innovation, Ivar Wiersma stated the following;
What’s really different is that [use of digital ledger technology] gives the regulator the opportunity to get direct access to the ledger and see the entire digital history of the transaction, from where it originated to its ownership and attributes. In the over-the-counter environment, which is traditionally not that transparent, it could make the entire financial system more resilient.
R3 blockchain transfer success more proof than a lab test
Managing director at R3, Charley Cooper mentioned Reuters that the successful transfer was “far more than a proof of concept in a fenced lab.”
These are regulated institutions in a real market and it is a unique demonstration that blockchain solutions are being deployed in commercial settings.
Reuters report that the application has the potential of going live by end of 2018, according to a blockchain initiative representative of ING.
In December 2017, Amazon Web Services (AWS) partnered with R3 to use the capabilities of distributed ledger technology through the Corda platform. Also in November 2017, ING published a “Wall Street friendly” zero-knowledge proof which is capable of confirming the accuracy of a transaction while keeping its anonymity secure.