Russia's NSD hails blockchain first
May 16, 2018

MTS, Russia's leading telecommunications operator, Sberbank CIB, Sberbank's corporate investment business, and National Settlement Depository (NSD), Russia's central securities depository, have for the first time in Russia placed commercial bonds denominated in rubles and based on blockchain with the full life cycle of a security in the form of a set of smart contracts – from placement to the full performance of the issuer's obligations to investors.

To process the transaction, National Settlement Depository provided its own blockchain platform based on Hyperledger Fabric 1.1. Sberbank CIB was the organizer and main buyer of the issue of the MTS RUB 750 million six-month bonds.

As part of the transaction preparation, NSD implemented a full delivery versus payment (DVP) settlement model based on blockchain allowing it to transfer securities and funds simultaneously. NSD added an option to change the composition of network participants to work with a wider circle of investors, and updated the system to the newest version – Hyperledger Fabric.

The issuer, the CSD, and the investor were granted access to the decentralized platform. The confidentiality of work with accounts was ensured, and Russian legislative specifics were taken into consideration.

The system processes only digitalized assets, making the process of placing, circulating, and record keeping securities highly transparent. Each party to the transaction can exchange documents online and follow the transactions' status. Settlements are conducted directly in the record keeping system, and this accelerates the process of concluding the transaction. The selected cryptographic protection scheme let all operations be conducted electronically using the signatures of the Moscow Exchange Group's clients.

Eddie Astanin, NSD Chairman, pointed out: "NSD was one of first Russian companies which were interested in blockchain. In the first quarter of 2017, NSD began developing the prototype of the platform to conduct bond transactions. The Sberbank and MTS transaction was the first one which gave blockchain the status of an industrial technology which ensured confidentiality and accelerated securities settlements. Our final task is to create digital asset accounting infrastructure together with market leaders; the existence of the infrastructure is a crucial condition for institutional investors to enter our market and for the market's successful development and increase in its capitalization."

 





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MTS, Russia's leading telecommunications operator, Sberbank CIB, Sberbank's corporate investment business, and National Settlement Depository (NSD), Russia's central securities depository, have for the first time in Russia placed commercial bonds denominated in rubles and based on blockchain with the full life cycle of a security in the form of a set of smart contracts – from placement to the full performance of the issuer's obligations to investors.

To process the transaction, National Settlement Depository provided its own blockchain platform based on Hyperledger Fabric 1.1. Sberbank CIB was the organizer and main buyer of the issue of the MTS RUB 750 million six-month bonds.

As part of the transaction preparation, NSD implemented a full delivery versus payment (DVP) settlement model based on blockchain allowing it to transfer securities and funds simultaneously. NSD added an option to change the composition of network participants to work with a wider circle of investors, and updated the system to the newest version – Hyperledger Fabric.

The issuer, the CSD, and the investor were granted access to the decentralized platform. The confidentiality of work with accounts was ensured, and Russian legislative specifics were taken into consideration.

The system processes only digitalized assets, making the process of placing, circulating, and record keeping securities highly transparent. Each party to the transaction can exchange documents online and follow the transactions' status. Settlements are conducted directly in the record keeping system, and this accelerates the process of concluding the transaction. The selected cryptographic protection scheme let all operations be conducted electronically using the signatures of the Moscow Exchange Group's clients.

Eddie Astanin, NSD Chairman, pointed out: "NSD was one of first Russian companies which were interested in blockchain. In the first quarter of 2017, NSD began developing the prototype of the platform to conduct bond transactions. The Sberbank and MTS transaction was the first one which gave blockchain the status of an industrial technology which ensured confidentiality and accelerated securities settlements. Our final task is to create digital asset accounting infrastructure together with market leaders; the existence of the infrastructure is a crucial condition for institutional investors to enter our market and for the market's successful development and increase in its capitalization."

 



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