R3's blockchain-inspired Corda platform is being put to the test in the Euro Debt Market and syndicated loan arena under separate field trials with a collective of international banks.
In New York and Sao Paulo, Itaú Unibanco has borrowed US$100 million through a Club Loan from Standard Chartered (SC) and Wells Fargo over the Corda shared ledger.
Under the Proof of Concept, the participants were able to monitor loan agreement revisions, comments and the sequence of approvals over the ledger and track and subsequently audit any changes in terms leading up the deal closure.
Germana Cruz - head of financial institutions Latin America at Standard Chartered says the process eliminates the exchange of e-mails, prevents version control issues of agreements and allows participants to ensure that Conditions Precedent are fulfilled in real time, says
“The blockchain platform has the potential to bring significant operational, financial and technological gains to all parties concerned," she says. "The PoC demonstrated its potential to reduce costs and gains in efficiency in the process of negotiation of the agreement and at other stages of the traditional transactions involving a Club Loan."
In a separate development, R3, together with partners Commerzbank, ING, Natixis and Rabobank, has announced the completion of a live commercial paper transaction on a new Corda-based Euro Debt Solution application.
With Natixis acting as the issuer, Rabobank acting as the investor and ING as both the dealer and escrow agent, the trade saw the successful issuance of EUR100,000 notional, with a one-day maturity. Commerzbank provided the pilot framework, software and distributed ledger network for the trade as well as guidance on regulatory implications.
In gestation for two years, the banks have worked with external counsel Allen and Overy to develop a comprehensive legal framework for the initiative.
Marnix Bruning, head of money market & central bank sales at ING, comments: “This live trade lays the foundation for dealing ECP more efficiently and cost effectively. It also marks the start of building an improved DLT platform that enables direct settlement and reduces operational risk and costs at the same time. At ING we look forward to our continued collaboration in taking this solution to the next phase.”