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BMO, Ontario Teachers' Pension Plan pilot blockchain technology for fixed income issuance transaction
BMO Capital Markets, the investment banking subsidiary of Canadian Bank of Montreal, is working on a blockchain pilot together with leading pension fund investor Ontario Teachers' Pension Plan.
The pilot involved recording a fixed income issuance transaction on a blockchain platform. It demonstrated how smart contracts and blockchain could be used for fixed income markets. According to the official release:
“The transaction included Bank of Montreal as the issuer and Ontario Teachers' as the buyer of a CDN$250MM 1-year floating rate Deposit Note, making it the first Canadian dollar fixed income issuance demonstrating the viability of blockchain platforms.”
Built using open source blockchain infrastructure, the blockchain issuance system allows the security issuer and buyer to view the transaction on the blockchain and verify the accuracy of the term sheet information and payment amounts until maturity of the fixed income security. The technology is intended to enable cost reduction in areas such as compliance, financial reporting, security clearing and settlement of cash transactions.
"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," said Kelsey Gunderson, Head of Global Trading, BMO Capital Markets. "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."