The World Bank launched a blockchain-only bond, which features a 2-year maturity arranged by the Commonwealth Bank of Australia dubbed “bond-i”– a play off Sydney, Australia’s Bondi Beach.
The bond raised $80 million or 110 million Australian dollars, which include a mix of investors, such as Australian banks and state treasuries. The World Bank said the bond is the first debt issue “created, allocated, transferred and managed through its life cycle using distributed ledger technology.” The use of blockchain to issue debt securities already been used by other companies to issue bonds using cryptocurrency and blockchain technology.
“We welcome the huge interest that this transaction has generated from various stakeholders and will continue to seek ways to leverage emerging technologies to make capital markets more secure and efficient,” said World Bank treasurer Arunma Oteh.
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Canadian Fixed-Income Transaction
BMO Capital Markets, the investment banking subsidiary of Canadian Bank of Montreal, successfully launched a pilot fixed-income issuance transaction that mirrors a blockchain platform in conjunction with leading pension fund investor Ontario Teachers’ Pension Plan. The transaction included Bank of Montreal as the issuer and Ontario Teachers’ as the buyer of a CDN$250MM 1-year floating rate Deposit Note, which makes it the first Canadian dollar fixed-income issuance using a blockchain platform.
The pilot transaction–booked as a traditional Canadian Depository for Securities (CDS) issuance and successfully paralleled through the blockchain–was conducted to demonstrate how smart contracts and blockchain could be utilized in the fixed-income markets.
BMO Capital Markets designed and built a blockchain issuance system by using open source blockchain infrastructure with the goal of testing a next generation settlement system. The prototype allows the security issuer and buyer to view the transaction on the blockchain, as well as verify the accuracy of the term sheet information and payment amounts until maturity of the fixed-income security.
The technology is intended to enable cost reduction in several areas including compliance, financial reporting, security clearing and settlement of cash transactions. BMO Capital Markets will continue to partner with clients and other institutions in the evolution of blockchain as an open settlement system.
BMO Capital’s use of blockchain technology trends toward an increased use in financial applications. Per a report, the four biggest auditing firms globally – Deloitte, EY, KPMG and PwC – are part of a group of 20 banks in Taiwan that are experimenting with blockchain technology for auditing financial reports.
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