News about asset servicing of digital assets

Dutch banking and finance company Rabobank has executed 19 real-time Euro Commercial Paper transactions, the first of its kind, in its largest blockchain pilot to date.

The transactions were sent from the Dutch State Treasury Agency and Rabobank Treasury and Austria-based Erste Bank, and received by Northern Trust Asset Management in the UK.

The Dutch Financial Markets Authority and other European regulators had access to the blockchain, providing an insight into how the technology could be used in regulatory work.

The pilot saw more than €40 million in nominal, one-week maturity Euro Commercial Papers executed in a fixed and floating format. Securities were issued from existing certificate and deposit financing programs to participating borrowers, with assigned individual XS-ISIN codes.

The execution, distribution and settlement of these transactions occurred within 30 minutes, offering near-real-time liquidity to Northern Trust Asset Management for publicly issued and traded debt securities in both the primary and secondary markets.

The “real-time” settlements were achieved through Rabobank’s private permissioned, ledger-based platform, which was integrated into operational flows and front-to-back risk systems. This reduces the time and costs of operations.

Securities were issued in and settled against fiat cash on Euroclear Bank’s infrastructure, harmonized with issuing and paying agents on their own infrastructure, and sent to Tradeweb’s electronic trading platform.

Youssef el Mir, global head of trading at Rabobank, says: “We believe the digitization of money markets can increase liquidity and transparency at a critical time for the asset management industry. These latest transactions, and the solution we’ve worked together to deliver, prove that blockchain technology can be smoothly and seamlessly integrated into financial institutions’ legacy systems with the right approach.”

Philippe Verriest, head of innovation, research and development at Euroclear, comments: “The pilot successfully resulted in a large reduction in the issuance of eligible counterparty instruments and settlement processing times, while providing near-instant liquidity to the issuer. In our role as a financial market infrastructure, we’re here to support and partner with the market in the development of breakthrough technologies that will drive real efficiency.”

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