Currently each bank stores its own instance of contracts, which can introduce inconsistencies and reconciliation challenges. Smart contracts operating on distributed and shared ledgers enable each of the parties to see the same agreed set of legal documents.

The new group, comprising representatives from Barclays, Isda, UCL and Norton Rose Fulbright, has been set up to address the challenges of developing master templates for smart contracts, with an initial focus on how they could be implemented within existing legal and regulatory frameworks.

The group’s longer term goals include working with the legal community and academics to investigate how to take smart contracts to a point where they can be admissible in court and used for entry into dispute resolution.

Richard Brown, R3 CTO, comments: “The promise of distributed ledger technology is that we can move to a world where sophisticated financial agreements between firms can be recorded and managed consistently and accurately without duplication, error or unnecessary cost. However, for this vision to be realised, more than just innovative technology is required: this technology must be embedded in a broader legal context and be sympathetic to the reality of business.”

Earlier this year, Barclays Bank demonstrated a Smart Contract Templates prototype creating an Isda agreement and an interest rate swap trade that then executed as a smart contract on R3’s Corda platform

Lee Braine, investment bank CTO office at Barclays, welcomed the broader collaboration effort: “Barclays has been actively engaging in the blockchain field for two years, including experimenting with vendor products, supporting innovative startups via the Barclays Accelerator, and participating in industry consortia such as the R3 consortium and the Post-Trade Distributed Ledger Group. This year, Barclays Investment Bank has explored smart contracts in greater depth by leveraging its technology, legal and front-office teams - and collaborating with industry and academia through open innovation. We look forward to ongoing collaboration.”