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Sberbank, a state-owned bank, has signed a repurchase agreement, or repo, with the help of blockchain on Thursday 6, 2018. Now, the combination of DLT and smart contract establishes very diaphanous financial contracts and seems to strengthen security for both the financial institution and the customers.
The Russian bank
declared which, with a strong involvement of the Region Brokerage Company and the National Settlement Depository (NSD) of Russia, had completed the three-way repo over the counter (OTC) of the world through an intelligent contract. In this agreement, the securities are sold to an individual, with the trader agreeing to repurchase them at a certain price and future pre-put date. These are actually short-term loans.
A combined effort
During the tests, Sberbank played the role of seller, Region acted as a buyer and NSD operated as a settlement agent. This big deal was largely for an OTC repo denomination in ruble that was secured by Russia's loan bonds. They did not reveal the true value of the instrument.
The use of blockchain technology has enabled these three main parts to automate significantly different parts of the business, such as margin management, settlement and deposit recount. This agreement was properly regulated by existing local laws.
Andrey Shemetov, is the vice president of Sberbank and also head of the global market department. Andrey revealed that:
"We are confident that the market will adopt our technology as a new standard for OTC repurchase agreements and market participants will appreciate all the benefits it offers."
Alina Akchurina, Managing Director for Collateral Management Systems, NSD,
He said:
"The integration of NSD's CMS into distributed blockchain networks is part of our development strategy.The use of blockchain to manage repurchase operations is one of the few examples that justify the use of this technology. "
Blockchain Everywhere
Sberbank launched a blockchain technology lab in 2018 to create and test DLT-based business solutions. And in May he also collaborated with MTS, a telecommunications company, to carry out commercial transactions worth $ 12 million using distributed ledger technology (DLP).
Various financial institutions in other parts of the world are also analyzing the DLT as a method of carrying out transactions in various financial instruments. On December 6, four European giant banks (ING, Rabobank, Commerzbank and Natixis) carried out a live transaction for a specific short-term debt instrument through the Corda platform created by the R3 blockchain technology consortiums.
In November this year, Singapore's central bank, along with the country's stock exchange, formed a settlement system that uses smart contracts to facilitate post-trade exercises and reduce the settlement cycle.
