Sberbank says that it is the first in Russia to have obtained a patent for a repo deals solution and an execution system that utilise distributed ledger technology. The solution was developed solely by the bank.
With the solution, parties to a deal can register the terms of a repurchase agreement inside a self-executable decentralised environment, creating a smart contract. Then the parties will sign the smart contract with their e-signatures via a distributed ledger, while the contract will meet the terms of the first part of the repo deal by transferring funds and securities to the parties.
The market price of securities is monitored and put on a distributed ledger over the entire lifetime of a deal. Picking up signals from an external source, a smart contract will make mutual payments to the parties and close the deal automatically.
The system covers the entire end-to-end process, which the bank says removes any issues of reconciliation and controversies between the parties, therefore reducing risks for the bank and making financing more affordable for clients.
“The solution we’ve designed is the first demonstration of what blockchain technology is capable of when it comes to modelling a comprehensive financial product such as repo," said Andrey Shemetov, vice president, head of Global Markets at Sberbank. "Sberbank has proved that new decentralised infrastructure can be built on blockchain, letting parties of the most complicated financial deals work directly with each other without any mediators.”
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