In a significant move, four leading European banks collaborated with enterprise blockchain software company R3 to execute a live commercial paper transaction based on R3’s blockchain platform Corda.
Corda is an Ethereum blockchain-based decentralized platform that facilitates the development of interoperable blockchain networks that transact directly and privately. Businesses especially financial institutions use the platform.
The group of international banks who partnered for this new move included Germany’s Commerzbank, ING, France’s Natixis and Dutch financial services firm Rabobank.
The transaction was made on the Corda-based Euro Debt Solution application where Natixis issued 100,000 Euros ($113,772) notional with a one-day maturity. While Rabobank acted as the incestor, ING was the escrow agent cum dealer. Commerzbank provided the pilot framework, software and Distributed Ledger network for the transaction, and simultaneously offering regulatory guidance.
Commenting on the new initiative, Marnix Bruning, Head of Money Market and Central Bank Sales in ING said, “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.”
While, David E. Rutter, CEO of R3, commented, “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.”
Since the inception of the project in 2017, the partners worked in close coordination with external legal counsel Allen and Overy to develop a comprehensive legal framework.
The blockchain solution strives to provide excellent benefits for issuers, by offering a structured process to access debts and at the same time ensure better transparency. It also hopes to decrease operational costs and risks for banks while making it possible for customers to execute same-day settlements.
In another major development, R3 recently launched the Corda Settler, an application which helps complete global cryptocurrency payments within enterprise blockchains.