Bank of Montreal tests bond issue on blockchain
The Bank of Montreal (BMO) and Ontario Teachers’ Pension Plan are testing a Canadian dollar-denominated bond issue using blockchain, the bank said in a press release on Wednesday night.
BMO sold C$250m ($190m) of one-year floating rate deposit notes to the pension fund and used blockchain to mirror the transaction to test the viability of the distributed ledger technology in fixed income markets.
The prototype blockchain platform allows the bond issuer and the buyer to view the transaction and verify the accuracy of yield information and payment amounts right through to maturity of the issue, and is intended to reduce costs in regulatory compliance, financial reporting and clearing and settlement.
“This is an important first step in developing a fully functional blockchain capability that we think will eventually allow primary and secondary trading of securities,” said Kelsey Gunderson, Head of Global Trading, BMO Capital Markets.
“We understand the potential that blockchain brings to the capital markets and we look forward to continuing to drive innovative solutions to help our clients.”
CBA blockchain bond issue
Last week, the Commonwealth Bank of Australia announced it was using blockchain technology to run a bond issue, partnered by the World Bank.
It said its bond issue would use a private Ethereum blockchain network to act as a “facilitating platform for different participants”.