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National Bank of Canada and J.P Morgan Test $191 Million CAD Blockchain Debt Transaction

national bank of canada

In what the banks describe as an “important milestone in progressing blockchain technology,” the National Bank of Canada and J.P Morgan tested J.P Morgan’s Ethereum blockchain variant Quorum®. The test transaction was a parallel simulation of a $150 million USD (Approximately $191 million CAD) debt issuance, a one-year floating-rate Yankee certificate of deposit.

J.P Morgan has been developing its open-source Quorum® blockchain technology specifically for financial market participants. The debt issuance application incorporates functions across the debt instrument transaction lifecycle including origination, distribution, execution, settlement, interest rate payments, and maturity repayments.

David Furlong, Senior Vice-President of Artificial Intelligence, Venture Capital and Blockchain at the National Bank of Canada describes blockchain technology as having the potential “to bring about major change in the financial services industry.”

Innovation for J.P Morgan, Goldman Sachs Asset Management, Pfizer, and Western Asset

Goldman Sachs Asset Management, Pfizer, and Western Asset are a few of the investors in the Yankee certificate of deposit involved in the test announced on April 20th, 2018.

“We are committed to finding innovative ways to help our clients through technology,” said David Fishman, Head of Goldman Sachs Asset Management’s Liquidity Solutions business.

Western Asset has been evaluating blockchain technology and developing applications. It “sees the technology’s ability to transform the capital market industry” and is pleased to have applied it to a real-world trade.

“Western Asset is actively seeking to bring blockchain projects from the lab environment into production and will continue to work on applications designed to benefit our clients,” said Penny Morgan, Manager – Global Securities Operations, Western Asset Management Company.

Building ‘transformative opportunity’ for shareholders

J.P Morgan’s blockchain program includes a mandate to identify how blockchain technology can create value, efficiency, and a better experience for clients. J.P Morgan are exploring blockchain-enabled capital market applications and how these “transformative opportunities” can benefit stakeholders.

With open-source technology like Quorum, the bank hopes to enable and accelerate progress.

“This is an exciting example of how J.P. Morgan leveraged our combined capabilities in capital markets and blockchain technology, delivering results to a diverse set of clients,” said Christine Moy, Blockchain Program Lead, J.P. Morgan.

Following the releases of a number of patent applications by other Canadian banks including RBC and TD Bank. It is interesting to see progression of ideas into practical applications and tests of this magnitude. Such critical tests of blockchain technology in major financial applications are a natural progression towards to the potential day to day implementation into major financial processes.

“This is a unique opportunity for us to expand our knowledge of blockchain,” said Furlong. “National Bank of Canada will continue to innovate over the coming years and remain on the lookout for ways we can bring our partners greater value.”


Image credit: National Bank of Canada logo


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