Ontario Teachers' Pension Plan and BMO Capital Markets successfully tested a fixed-income transaction using a blockchain platform.
The pilot transaction, announced last month, mirrored an actual Canadian dollar fixed-income transaction, said a spokesman for the C$193.9 billion ($148.4 billion) Toronto-based pension plan. In the actual exchange, Ontario Teachers bought a Bank of Montreal-issued C$250 million one-year floating rate deposit note.
The pilot transaction was conducted to demonstrate how smart, or self-executing, contracts and blockchain could be used for fixed-income markets, both BMO and OTPP said in a news release. Among the benefits would be cost reduction in compliance, financial reporting, security clearing and settlement of cash transactions, they said.
The system was built by BMO Capital Markets using open source, or publicly accessible design, blockchain infrastructure that allows an issuer and buyer to view the transaction and verify the accuracy of the terms and payment amounts until maturity of the fixed-income security.
"Ontario Teachers is committed to exploring technology and innovations that might improve our ability to serve our members," Audrey Gaspar, OTPP managing director, treasury and integration, said in the news release.