North American-based financial services provider BMO Capital Markets (BMO), in collaboration with a pension fund, conducted the first pilot that uses blockchain to automate fixed income transactions in Canadian dollars.
Thanks to the technology that underpins cryptocurrencies, BMO was able to issue a CDN$250MM 1-year floating rate Deposit Note which included Ontario Teachers fund as the buyer.
In the release announcing the fixed income experiment, BMO said the trial marked an unprecedented scale of institutional collaboration between the financial and technology communities and represents a leap forward in improving the efficiency of trade transactions. Records were shared and checked against each other, rather than a central ledger, to verify the accuracy of the term sheet information and payment amounts until the maturity of the fixed income security.
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BMO Capital is building a blockchain-based ecosystem that will facilitate the trading of institutional-grade fixed income products. The technology will ultimately allow users to list, buy, and sell any type of fixed income security.
In addition to making their operations more transparent, the institutions reckon the technology could save them money by cutting out costs in several areas including compliance, financial reporting, security clearing and settlement of cash transactions.
BMO Capital Markets, the investment and corporate banking arm of BMO Financial Group, is comprised of a team of nearly 100 professionals operating in eleven major hubs including London, Toronto, New York, Shanghai, Beijing and Hong Kong.
“This is an important first step in developing a fully functional blockchain capability that we think will eventually allow primary and secondary trading of securities. We understand the potential that blockchain brings to the capital markets and we look forward to continuing to drive innovative solutions to help our clients,” said Kelsey Gunderson, Head of Global Trading, BMO Capital Markets.