Sberbank and REGION Group have settled the first Russian law-governed repo transaction using Hyperledger Fabric 1.2. Smart contract have been developed by Sberbank’s Blockchain laboratory. Then it was ported into NSD’s Collateral Management System operating in NSD’s blockchain securities network.
To make a deal, Sberbank and REGION sent instructions to their blockchain nodes, smart contract executed an order in distributed environment, then NSD’s Collateral Management System has settled the transaction including all the steps required by Russian law.
Market participants receive additional flexibility while using blockchain in repo — it enables a new options in proceeding of transactions like transparent workflow, additional level of trust. The smart contract covers all the terms and conditions disclosed within the deal, including all parameters to make the deal fair and effective for parties, allowing peer-to-peer movements of funds in nearest future.
“The first tri-party repo transaction entered into using a smart contract in the blockchain network is a next important step toward the automation of business processes which are part of Sberbank’s work with its counterparties in financial markets. The integration of smart contracts and the distributed ledger technology’s operational principle make financial transactions more transparent and secure both for clients and the Bank. We believe that the technology developed by us will become a new market standard for OTC repo transactions, and that market participants will appreciate all the benefits it offers,” said Andrey Shemetov, Vice President, Head of the Global Markets Department, Sberbank.
“Region Group keeps itself well informed about cutting-edge financial technologies to be able to quickly implement the newest practices and solutions in products for our clients. We are very happy with our cooperation with Sberbank and NSD in making this pilot blockchain-based repo transaction. All those who were involved in the transaction did a great job, and we gained great experience and knowledge of the product which is an innovative one for our market. I am sure that in the future blockchain-based repos made using NSD’s CMS will have their proper place in the OTC repo market,” added Andrey Zhuikov, Partner, member of the Board of Directors, Region Group.
“Integrating NSD’s CMS into the blockchain network is part of our development strategy. Using blockchain for servicing repos is one of a few examples of the justifiable use of this technology. The independence of settlements conducted using smart contracts, combined with the neutrality of NSD as a collateral management agent, results in the most flexible, reliable and progressive mechanism as possible for making OTC transactions. In this transaction, NSD not only acted as a settlement depository, but also provided collateral management services to the parties, and supplied market data used to settle the smart contract,” pointed out Alina Akchurina, Managing Director for Collateral management and Tri-Party Services, NSD.