The World Bank and Sydney-headquartered Commonwealth Bank (CBA) have enabled the functionality to record secondary market trading data for its Blockchain Offered New Debt Instruments (bond-i) on a distributed ledger.
The functionality was developed by the CBA in conjunction with the International Bank for Reconstruction and Development, one of the two wings of the World Bank, and market maker TD Securities. With this, it became the first bond issuance and trading that was recorded using a blockchain.
Commenting on the development, Jingdong Hua, vice president and treasurer at the World Bank, said: “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. It speaks to the innovation and commitment of all our partners, including investors, that we were able to achieve this together.”
First bond on the blockchain
Bond-i was issued last year on a public Ethereum after a collaboration between the World Bank and the CBA. As reported by Finance Magnates earlier, the Australian bank was the sole arranger of the bond and even the blockchain platform was developed at the CBA Blockchain Centre of Excellence.
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“Since issuing bond-i in August last year, the positive feedback and interest from the technology and financial sector community globally has been extraordinary,” Sophie Gilder, head of experimentation and commercialization at CBA Innovation Labs, said.
At the time of issuance, the bond was assigned an AAA rating and was used to raise capital for the World Bank’s Reconstruction and Development division.
Meanwhile, established institutions around the globe are also betting heavily on blockchain technology. Earlier this year, the London Stock Exchange (LSE) entered the enterprise blockchain market by investing in a bond tokenization startup.
“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 realize that vision,” Gilder added. “Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”