R3 and European banks complete euro commercial paper transaction
R3, the blockchain consortium, has partnered with Commerzbank, ING, Natixis and Rabobank, to produce a live commercial paper transaction on the Euro Debt Solution application, built on R3’s platform Corda.
This event follows the previous simulated transaction on an earlier version of the solution in September 2017.
“The issuance and settlement of securities is a complex process and current models are rife with inefficiency,” says David E. Rutter, CEO of R3. “Corda addresses these challenges by enabling parties to financial agreements to record them once and collaborate to maintain accurate, shared records of these agreements.”
With Natixis acting as the issuer, Rabobank acting as the investor and ING as both the dealer and escrow agent, the trade involved an issuance of €100,000 notional, with a one-day maturity.
Commerzbank provided the pilot framework, software and distributed ledger network for the trade as well as guidance on regulatory implications.
Since the project began in 2017, participants in the initiative have established an operational structure and worked with external legal counsel Allen and Overy to develop a legal framework.
The project participants will continue with the development of the solution. The solution aims to “reduce operational costs and risk, as well as being able to deliver intraday settlement finality for their clients”.
Marnix Bruning, head of money market and central bank sales at ING, comments: “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.”
In other recent news on R3, yesterday (5 December) it teamed with Ripple to launch a universal settler app for payments on Corda.