A group of German banks working with the R3 blockchain consortium has successfully replicated the sale of a €100,000 security on a distributed ledger platform.
, Commerzbank, KfW Banking and MEAG all took part in the effort, designed to test an extension of R3's Corda platform. According to the companies involved, the trial served to show how a money market instrument, traded using distributed ledger technology (DLT), could take place with fewer intermediaries and in a shorter timeframe.
Built using an add-on to R3's Corda platform – which was first unveiled last year – the technology is said to have made the trade transparent through real-time visualization. The combined effects, the release states, provided an example of the efficiency gains that securities market participants could gain from the use of DLT.
"A same day value date can reduce settlement risk, thus providing relief in terms of capital. As money-market instruments are usually traded in high volumes, a marked reduction in capital and liquidity costs can be expected," the firms said.
In statements, participants sought to stress the value of the "real-time" nature of the transaction, while providing insight into how DLT might change business operations.
"This project has allowed us to analyse from an investor's perspective the impact of blockchain technology on front and back-office processes, and regulatory aspects," said Frank Wellhöfer, a managing director at MEAG.
Going forward, the banks involved indicated they would seek to test the "market readiness" of the platform, with possible next steps including the development of reporting interfaces that would enable information to be shared with regulators.
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