Sberbank, a state-owned Russian banking and financial services company headquartered in Moscow, and telecom firm MTS, the leading Russian telecommunications operator and digital service provider, announced that they successfully completed the country’s first commercial bond transaction using blockchain.
Russian Bank Executes Country’s First Commercial Bond Transaction
The transaction was carried out by Sberbank CIB, the corporate and investment banking business of Sberbank. The transaction was placed through a proprietary blockchain network system operated by the National Settlement Depository (NSD). It is based on Hyperledger Fabric 1.1, a project under the Hyperledger umbrella.
MTS placed commercial bonds of 750 million rubles (around $12.11 million) for sale, and the primary buyer was Sberbank CIB. The bonds involved in the blockchain transaction have a maturity period of 182 days with an annual coupon rate of 6.8 percent. The trade was privately placed on the OTC market.
The transaction was processed through the standard delivery against payment settlement system which works on simultaneous transfer of the money from the buyer and securities from the seller using the blockchain system. As per the MTS release, “The framework of the transaction was structured to include the possibility of a dynamic change in the composition of network participants in order to potentially open the issue to a wide range of investors.”
Andrey Kamensky, VP of finance, investments and M&A at MTS told CoinDesk, “The entire settlement chain, from security placement and cash receipt to fulfillment of all obligations to the investor.”
NSD, in collaboration with various Russian banks and other entities, has been working on the trials of its Hyperledger-based commercial bond trading platform since October 2017. Earlier phases of testing the blockchain-based transaction processing system involved Raiffeisenbank Russia purchasing $10 million worth of bonds over a mobile phone network. NSD had announced plans to launch its own cryptocurrency wallet last year. (For more, see Russia’s Central Depository Will Launch its Own Crypto Wallet.)
Eddi Astanin, chairman of the board at NSD, told CoinDesk, “The pioneering transaction with Sberbank and MTS confirmed blockchain’s status as an efficient industrial technology providing confidentiality and speed during securities settlement.”
Russian authorities and commercial entities have been experimenting with blockchain technology for long. Late last year, there were reports about the nation working on a national cryptocurrency. (See also, Russia Will Issue National Cryptocurrency ‘CryptoRuble’: Report.)
Earlier this year, it partnered with another oil-producing nation, Venezuela, which has also tried interesting experiments in adopting the blockchain technology. (See also, Venezuela and Russia Are Collaborating on Cryptocurrency.)
Earlier this week, another global investment bank HSBC declared that it has successfully made the world’s first global trade finance transaction using a blockchain system, indicating a global trend in embracing the blockchain technology. (For more, see HSBC Makes First Blockchain Trade Transaction.)