The International Bank for Reconstruction and Development (World Bank) and Commonwealth Bank (CBA) have enabled secondary market trading recorded on blockchain for bond-i (blockchain operated new debt instrument), making this the first bond whose issuance and trading are recorded using distributed ledger technologies.
The successful completion of a secondary transaction with trading activity recorded on a distributed ledger illustrates the vast potential to enhance the co-ordination of securities trading and management on blockchain – delivering a verified, permanent record and instant reconciliation. The functionality was developed by CBA in conjunction with World Bank and market maker TD Securities.
The World Bank issued bond-i in August 2018, which was the world’s first bond to be created, allocated, transferred and managed through its life cycle using distributed ledger technology. CBA was the sole arranger for the bond.
“Enabling secondary trading recorded on the blockchain is a tremendous step forward towards enabling capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions,” said World Bank Vice President and Treasurer Jingdong Hua. “It speaks to the innovation and commitment of all our partners, including investors, that we were able to achieve this together.”
“Since issuing bond-i in August last year, the positive feedback and interest from the technology and financial sector community globally has been extraordinary,” said Sophie Gilder, Head of Experimentation & Commercialisation, CBA Innovation Labs. ”There is a growing recognition that blockchain technology can deliver a superior digital market for raising capital and then managing and trading securities, so we are working with our strategic partners to realise that vision.
“Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”
The ‘bond-i’ project is part of a broader strategic focus of the World Bank to harness the potential of disruptive technologies for development. The bond-i blockchain platform was built and developed by the CBA Blockchain Centre of Excellence, housed in the Sydney Innovation Lab.
This project builds on the leadership and experience of CBA’s dedicated blockchain team, which has taken a lead role in applying blockchain technology to capital markets.
The project is advised by King & Wood Mallesons as legal counsel, and benefits from an independent code review by Microsoft. IHS Markit provide independent valuations.
The bond-i project continues to expand and improve and has benefited from the input and feedback from foundation investors and other capital market partners. The project continues to welcome interest from financial market partners.