Sberbank Completes First Blockchain-Enabled Commercial Bonds Transaction in Russia
Russia’s Sberbank CIB has implemented the first commercial bond transaction using smart contracts in the country, carried out on the Hyperledger Fabric 1.1-based blockchain.
Sberbank CIB, the corporate and investment banking business of Russia’s largest bank Sberbank, conducted the first blockchain-based commercial bond transaction in Russia, according to a Sberbank announcement May 16. The transaction was completed in partnership with MTS, a leading Russian telecoms operator, and the National Settlement Depository (NSD).
Sberbank CIB organized the issue of MTS corporate bonds for the value of RUB 750 bln ($12 mln) with 6-month maturity, using smart contracts. The transaction was carried out on the Hyperledger Fabric 1.1-based blockchain platform provided by the NSD.
Commercial bonds are unsecured fixed-income securities issued by a company and placed on an over-the-counter (OTC) market through a private subscription. In order to conduct the transaction, a complete Delivery versus Payment settlement model was reportedly implemented using blockchain technology, which made the transfer of the bonds and money simultaneous.
All three parties received access to the blockchain platform to perform the transaction, which ensured transparency and confidentiality in dealing with the accounts, and met the requirements set forth by Russian law. Each participant of the deal could exchange documents online and track the transaction status in real time. Igor Bulantsev, Senior Vice President of Sberbank and Head of Sberbank CIB, said:
“This MTS bond issue not only allowed us to confirm the reliability, efficiency and secure nature of the blockchain platform and carry out complex structured transactions involving securities, but also demonstrated the potential that this technology has to develop Russia’s digital economy.”
Eddie Astanin, Chairman of the Executive Board of the NSD, noted:
“The NSD was one of the first organizations in Russia to adopt blockchain. We began working on a prototype platform for carrying out bond transactions in Q1 2017. The deal with Sberbank and MTS was the first of its kind, and shows that blockchain is a mass-use technology that provides confidentiality and speed when working with securities.”
He further added that the end goal of the agency is development of an infrastructure for recording digital assets in partnership with market leaders.
In December, Russia completed its first government-level blockchain implementation. Sberbank announced that it is partnering with Russia’s Federal Antimonopoly Service to implement document transfer and storage using blockchain technologies.
Earlier today, the Russian State Duma’s Committee for Legislative Work supported a bill “On Digital Financial Assets”, which was first prepared in March of this year. According to Pavel Krasheninnikov, head of the Legislative Work committee, the bill aims to “minimize the existing risks of using digital objects for transferring assets into an unregulated digital environment for legalization of criminal incomes, bankruptcy fraud or for sponsoring terrorist groups.”