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Glossary

Smart bond

Category — Bond Types
A Smart bond is a bond type that uses blockchain technology. The main advantages are cryptographic protection and verification of the participant when conducting a transaction with a security. The bond settlement takes place in a few seconds. This saves time and costs for all parties to the transaction. Rights are recorded in all registers of participants simultaneously, which leads to a decrease in infrastructure risks. With the traditional accounting of rights in a depository, any force majeure with a depository can lead to the loss of rights to a security. With blockchain accounting, the loss of the register of one participant will not lead to the loss of information in the registers of other participants. As of early December 2017, there were three smart bond issues.

At the end of January 2017, the Commonwealth Bank of Australia applied the blockchain in the placement of bonds of the Queensland Treasury Corporation.

In June 2017, Daimler announced a private placement of a € 100 million one-year bond using blockchain technology. The transaction was carried out with the help of the LBBW bank. The buyers were represented by Esslingen-Nurtingen, Ludwigsburg, Ostalb and LBBW.

On September 29, 2017, Megafon issued Russia’s first smart bonds for 500 million rubles https://cbonds.com/bonds/343181/, with the circulation period is of 3 months. The rights for them are recorded on the blockchain. Raiffeisenbank became the buyer of the bonds. The platform was developed by the National Settlement Depository (NSD).
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