Russian Bank Sberbank uses a Smart Blockchain contract for a three-way OTC repurchase agreement

The blockchain technology has recently found a new use case in Russia, after being used to conclude a repurchase agreement, also known as a repo. Sberbank, the state-owned Russian bank, announced this transaction on Thursday, involving the "first operation in the world" of this type which includes three parties in an over the counter (OTC) agreement with an intelligent contract.

With a repurchase agreement, the first party purchases securities and then the seller creates a plan to repurchase them at a specified date and price. It is no different from a short-term loan. In this particular case, the part of Sberbank was to act as a seller. The regional brokerage company was the buyer, with the filing of national settlement as settlement agent. This agreement covered government bonds, but the total value of the exchange was not listed.

By integrating the blockchain for this situation, the three parties were able to automate certain processes, such as margin execution, settlement and reporting of deposits. The parties have adhered to the local laws of the agreement, which have used an intelligent contract to sign.

The vice president of Sberbank and head of the global markets department, Andrey Shemetov, said:

"The combination of intelligent contracts and distributed register technology makes financial contracts more transparent and increases security for both customers and the bank, and we are confident that the market will adopt our technology as a new standard for making ready-to-use transactions. against OTC term and market operators will appreciate all the advantages it offers ".

Sberbank was responsible for launching a blockchain lab this year, allowing them to research, create and test various business blockchain solutions. In May, they established a partnership with MRS for the use of blockchain with commercial bond transactions, worth approximately $ 12 million.

Many traditional financial institutions have examined how to use blockchain transactions for settlement transactions. A live transaction was settled just yesterday between four European banks – Commerzbank, ING, Natixis and Rabobank – on the Corda platform. Last month a settlement system was set up for the central bank and the Singapore Stock Exchange, with smart contracts to eliminate concerns related to post-trade processes.