CBA executes cryptobond using blockchain platform
(24 January 2016 – Australia) In what the Commonwealth Bank of Australia (CBA) claims as an Australian and world first, it has issued a cryptobond for Queensland Treasury Corporation (QTC) using its capital markets blockchain platform.
The bank says it is the first blockchain bond issuance by a government entity, and was executed by its capital markets blockchain platform.
The transaction marks the first trial of CBA’s private, permissioned blockchain platform for the end-to-end issuance of bonds.
According to a statement from the bank, QTC successfully used the blockchain to generate a bond tender, view investor bids in real time, finalise investment allocation and settle instantly with investors. QTC acted in both the issuer and investor role to test the end-to-end process for the issuance.
The QTC bond was created in digital form using smart contract technology, and has the ability to automatically pay coupons to the current holder when due. The bond is a working prototype, is not tradable and does not carry any debt obligation.
George Confos, Executive General Manager of Business & Corporate Finance at CBA, said: “Our proof-of-concept demonstrates blockchain is capable of delivering efficiency to issuers, investors and other market participants. Blockchain makes it possible to increase efficiency and transparency, which will redefine how capital markets operate.
“We will continue to collaborate and work with clients, financial institutions and consortiums like R3, as well as with market participants, to understand the opportunities and real life applications of innovative and emerging technologies,” Confos said.
Sophie Gilder, Head of Blockchain at CBA said: “Building the capital markets platform and collaborating with forward thinking partners has accelerated our understanding of blockchain in the real world. Our long term view is blockchain technologies will significantly alter capital markets dynamics, changing the way participants interact, with increased efficiency having positive impacts on risk, cost and transparency.”
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