16 May, 2019 | AtoZ Markets – The World Bank and the Commonwealth Bank of Australia (CommBank) have started to work together for enabling the recording of secondary market bond trading, benefiting from the blockchain technology.
The announcement came on Wednesday, as both institutions confirmed that their successful recording of a secondary transaction for bond-i shows that the blockchain technology has a “vast potential”, with the first bond to have both issuance and trading recorded on a blockchain platform.
“bond-i” is a debt instrument operated on the blockchain technology.
The instrument, which helped the World Bank raise $81 million, was issued for the first time last August by the aforementioned institution, and was arranged by the CommBank.
“Enabling secondary trading recorded on the blockchain is a tremendous step forward towards enabling capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions.”, says Jingdong Hua, World Bank vice president and treasurer.
The idea of a Blockchain Bond transaction started in 2017
CommBank’s Blockchain Centre of Excellence, on its turn, helped building and developing the blockchain platform on top of the ethereum network, while Microsoft helped in reviewing it, as for its architecture, security and resilience.
Sophie Gilder, CommBank Innovation Labs’ head of experimentation & commercialization commented:
“Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”
CommmBank disclosed its intention to issue a bond over a blockchain system in 2017 without declaring the name of the issuer at the time.
It is worth mentioning in this context that financial institutions, including Santander, Societe Generale and Abu Dhabi-headquartered Al Hilal Bank, have been competing on testing blockchain-based systems for bond issuance.