Russia’s Sberbank Uses Smart Contract to Settle Three-Way Repo Deal
State-owned Russian bank Sberbank has completed a repurchase agreement or repo using block-chain technology.
The bank announced on Thursday that it has settled a "world's first" three-person ticketing (OTC) repurchase agreement with a cleverly signed contract with a local brokerage firm for participation in the National Settlement Depository (NSD). In the repo, the securities are sold to the company and the seller agrees to buy at a preset future date and price. They are effectively short-term loans.
For the sake of trial, Sberbank acted as the seller, the region as the buyer, and the NSD as the payment agent. The transaction was for the OTC Rupo, the Russian ruble, as collateral for government bonds. The value of this tool was not disclosed.
Using block chains, the three parties could automate different parts of the process, including running margins, billing, and repository reporting. The transaction was a binding financial contract that was regulated by local law and electronically signed through wise agreements, the bank said.
Andrey Shemetov, vice president of Sberbank, said,
"The combination of smart contracts and decentralized registration technology makes financial contracts more transparent and enhances the security of customers and banks."
"We are confident that the market will adopt our technology as the new standard for conducting OTC Leopard transactions, and market participants will appreciate all the benefits we have to offer," he added.
Earlier this year, Sberbank launched a block-chain lab to develop and test block-chain-based business solutions. In May, we partnered with telecommunications company MTS to conduct a $ 12 million commercial bond transaction using a block chain.
Other financial institutions are exploring block chaining as a means of solving a range of financial instrument transactions. Yesterday the four European banks of Komatsu Bank, ING, Natixis and Rabobank have solved the real deal on short-term debt certificates on the Corda platform developed by the block chain consortium Launch R3.
And last month, the Central Bank of Singapore and the stock exchange developed a payment system that used smart contracts to simplify post-transaction processes and shorten billing cycles.
Image of Sberbank via Shutterstock
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