Blockchain For Bonds Created By Commonwealth Bank of Australiabr>
The Commonwealth Bank of Australia (CBA) has developed a new blockchain-based platform that lets companies issue bonds directly to investors. The bank is preparing to launch it into the market early next year.
Founded in 1911 by the Australian government, CBA is one of the “big four” Australian banks, with National Australia Bank (NAB), ANZ, and Westpac. The bank was listed on the Australian Stock Exchange in 1991, and the government fully privatized it in 1996. The bank provides a variety of financial services, including retail, business and institutional banking, funds management, superannuation, insurance, investments, and brokering services.
CBA has been exploring blockchain’s use cases for over four years. CBA’s head of blockchain, Sophie Gilder, stated that they took a very practical approach and started with experiments. They have completed 25 proof of concepts or experiments applying blockchain and other emerging technologies to real-world business problems.
Gilder said the launch will be the culmination of the banks investing in the possibility of a single transaction that has the asset moving, and the payment for that asset secured, within the blockchain.
Earlier this year, the bank tested the new blockchain-based infrastructure with the Queensland Treasury Corporation (QTC). The trial saw QTC use the technology to generate a bond tender, view investor bids in real time, finalize investment allocations, and settle instantly with investors.
“The bond market today is relatively inefficient,” Gilder said. “There’s many, many intermediaries in the middle, and there’s a lot of time, cost, and error. We decided that we would look at how blockchain could change this market. We started with a completely blank sheet of paper and worked with our team to build a new issuance platform, so a completely new infrastructure, based on blockchain, could enable companies to issue bonds directly to investors and then trade it in the secondary market.”