Sberbank CIB, Russia’s largest, and MTS, a telecom firm, has successfully conduced Russia’s first commercial bond transaction using blockchain. The private subscription of the unsecured bonds is usually carried out on the OTC (over-the-counter) market.
The trade is then completed using the Delivery Versus Payment (DVP) model. In the reported transaction, all the parties were given access to a blockchain platform to conduct the transaction in a transparent manner. The distributed open ledger technology also allowed real-time tracking of the transaction.
Earlier on Tuesday, MTS handed over 750 million rubles ($12.11 million) worth bonds to Sberbank, which acted as the primary buyer of the transaction. The parties used a custom built blockchain platform designed by the National Settlement Depository (NSD). The platform was designed using Hyperledger Fabric 1.1, a blockchain framework developed by the Linux Foundation.
The Sberbank, in its press release, has said the issued bonds – a part of the OTC market – have a maturity period of 182 days, and bear a coupon rate of 6.8%.
Andrey Kamensky, the VP of finance and investment at MTS stated ‘Delivery Versus Payment’ [DVP] model was used for the transaction and is compliant with the Russian legislation.
Igor Bulantsev, the Senior Vice President of Sberbank and Head of Sberbank CIB opined that the use of blockchain technology improved efficiency, security, transparency, and reliability of the bond issue. This was the first time blockchain technology was employed in Russia to perform ‘structured transactions.’
Bulantsev is hopeful that this will encourage the country to forge ahead in developing its digital economy.
The transaction was overseen by the Russian Legislative Work Committee. The Committee’s main objective is to minimize fraud.
Eddie Astanin, the chairman of the Executive Board of the NSD stated that the agency anticipates more transactions of this kind to be completed on the blockchain platform in the months ahead.
“It shows that the blockchain is a mass-use technology that provides confidentiality and speed when working with securities.”