Sberbank in three-way repo deal on blockchain
The deal involved a rouble-denominated OTC repo secured by federal loan bonds (Obligatsyi Federal’novo Zaima – OFZ). From a legal point of view, the trio says the deal is governed by Russian law and is a binding financial contract that was signed electronically using a smart contract and e-signatures via the collateral management systems (CMS) of the NSD.
Andrey Shemetov, VP of Sberbank and head of the global markets department, says this is the “latest in a number of significant steps to automate Sberbank’s business processes for working with counterparties on financial markets”.
He adds: “The combination of smart contracts and distributed register technology makes financial contracts more transparent and increases security for both clients and the bank.”
Alina Akchurina, MD for collateral management systems at the NSD, comments: “Integrating the NSD’s CMS into distributed blockchain networks is part of our development strategy. Using blockchain to service repo deals is one of the few examples that justify the use of this technology.”
The deal had three parties: the seller – Sberbank, the buyer – BC Region, and the settlement agent – the NSD.
Interaction between the parties was automated and took place on a blockchain network. Each participant submitted an instruction to its node in the network, after which the smart contract concluded the deal and submitted settlement instructions to the NSD’s clearing system.
The NSD’s CMS platform was used to carry our settlements, which allowed the participants of the repo deal to automate the execution of margins, settlement functions and repository reporting.
Staying with this blockchain theme, both NSD and Sberbank have demonstrated an interest in the technology. Last month, they closed a deal on a commercial bond issue using blockchain.