Sberbank CIB and MTS issued bonds on a blockchain of NSD

MTS, the telecommunication operator in Russia, Sberbank CIB, korporativno investment business of Sberbank and the National Settlement Depositary (NSD) performed in May, 2018 placement of the Russia's first ruble commercial bonds on blockchain technology with implementation of complete lifecycle of the security in the form of a set of smart contracts – from placement before complete execution by the issuer of the obligations to the investor.

The national Settlement Depositary provided for carrying out the transaction own blockchain platform based on Hyperledger Fabric 1.1. Sberbank CIB became the organizer and the main buyer of bond issue of MTS of 6 months for the amount of 750 million rubles.

Commercial bonds are the debt securities having unsecured character and which are placed in curb market on the closed subscription. Within preparation for the transaction the complete model of calculations of DVP (Delivery versus Payment) on a blockchain at which the movement of securities and money happens at the same time was implemented (delivery against payment). Within the transaction the feature for dynamic change of list of participants of network for work with a wide range of investors is added, and updating to the latest version of Hyperledger Fabric is made.

For carrying out the transaction access to the decentralized platform was got the issuer, by central depository and the investor. Within the project confidentiality was provided during the work with accounts and also features of the Russian legislation are considered.

A system works only with the digitized assets, doing process of placement, the address and accounting of bonds by the most transparent. Each participant of the transaction has an opportunity to exchange documents online, to keep track of the status of carrying out the transaction. Calculations are performed directly in an accounting system that allows to accelerate carrying out the transaction significantly. The selected scheme of cryptographic protection allows to perform all operations in electronic form using the electronic signatures which are already available for clients of the Moscow Exchange Group. The source code of smart contracts is placed on GitHub (https://github.com/altoros/nsd-commercial-paper/) and is Hyperledger opened according to project requirements which participants since 2016 are Sberbank and the Moscow Exchange Group.

"NSD one of the Russia's first beginnings to be engaged in blockchain technology. Work on a platform prototype for carrying out transactions with bonds started in NSD in the first quarter 2017. The transaction with Sberbank and MTS became the first, the industrial technology which assigned the status to a blockchain providing confidentiality and speed when calculating with securities, – Eddie Astanin, the Chairman of the board of National settlement depositary emphasized. – Creation together with market leaders of infrastructure of accounting of digital assets which existence, – essentially important condition for arrival on the market of institutional investors and its dynamic development and growth of capitalization remains our final task".

Igor Bulantsev, the Senior vice president of Sberbank, the head of Sberbank CIB, noted: "Sberbank is the Russian leader in the field of implementation of technology and digital innovations in the financial sector. Bond issue of MTS not only allowed us to confirm reliability, efficiency and security of the platform based on a blockchain for the organization and carrying out the slozhnostrukturirovanny security transactions, but also once again proved prospects of technology for development of digital economy of Russia".

"MTS tests and implements new technologies in all activities, including spheres of corporate finances and a fintekh. At the same time we are faced by a task to accelerate an output of the innovative solutions from a phase of tests in operation. Today with participation of our partners we successfully performed the Russia's first issue of commercial bonds using smart contracts based on blockchain technology on all chain of calculations – from placement of papers and receiving money for them before complete execution by the issuer of the obligations to the investor, – the vice president of MTS for finance, investments, merges and absorption Andrey Kamensky noted. – MTS is going to apply further blockchain technology, first of all in financial markets as its use increases transparency of transactions, the trust among participants of transactions and reduces costs for performing transactions".