National Bank of Canada, with the support of J.P. Morgan, issued a
USD 150M, one-year floating-rate Yankee certificate of deposit, with a
parallel simulation of the issuance using blockchain technology. The
blockchain test involved the parties mirroring the execution of the
actual transaction through a debt issuance application developed by
J.P. Morgan that runs on Quorum®, an open-sourced variant of the
Ethereum blockchain, specifically designed to meet the needs of
financial markets participants.
The blockchain debt issuance application is designed to incorporate functions across the entire debt instrument transaction lifecycle, including origination, distribution, execution, settlement, interest rate payments, and maturity repayments. This unique collaboration between leading market participants is an important milestone in progressing blockchain technology toward real financial markets applications.
“Blockchain-related technologies have the potential to bring about major change in the financial services industry. National Bank of Canada is proud to join forces with trusted partner J.P. Morgan to test blockchain technology in the context of a Yankee certificate of deposit issuance. This is a unique opportunity for us to expand our knowledge of blockchain. 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,” said David Furlong, Senior Vice-President – Artificial Intelligence, Venture Capital and Blockchain at National Bank of Canada.
“One of the mandates of the J.P. Morgan blockchain program is to identify how blockchain technology can create value, efficiency, and a better experience for our clients across the financial markets value chain,” said Christine Moy, Blockchain Program Lead, J.P. Morgan. “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. We look forward to exploring blockchain-enabled capital markets applications, how these types of transformative opportunities can benefit our clients and counterparts, and how working together on open source technology like Quorum can enable and accelerate this progress.”
Goldman Sachs Asset Management, Pfizer, and Western Asset, a Legg Mason company, were among the investors in the Yankee certificate of deposit.
“We are committed to finding innovative ways to help our clients through technology,” said David Fishman, Head of GSAM’s Liquidity Solutions business. “We’re excited to have the opportunity to learn from this test and to help develop more efficient ways of trading – from providing more transparency, to streamlining processes and minimizing transaction costs.”
“Western Asset has been developing applications and evaluating blockchain technology over the past few years and sees the technology’s ability to transform the capital market industry. Western Asset, as a certificate of deposit investor, is pleased to have been able to advance the use of blockchain technology by applying 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, Western Asset Management Company.
J.P. Morgan was the sole dealer on the debt issuance. Synechron provided business and technology consulting. Davis Polk & Wardwell LLP advised J.P. Morgan on the transaction while Mayer Brown LLP and McCarthy Tétrault LLP advised National Bank of Canada. Market data is being provided by the Thomson Reuters data oracle BlockOne IQ for Quorum. National Bank of Canada and J.P. Morgan are members of the Enterprise Ethereum Alliance.
Caution Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the control of the Bank. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf. The forward-looking information contained in this press release is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.
About National Bank of Canada
With $251 billion in assets as at January 31, 2018, National Bank of Canada, together with its subsidiaries, forms one of Canada's leading integrated financial groups. It has more than 21,000 employees in knowledge-intensive positions and has been recognized numerous times as a top employer and for its commitment to diversity. Its securities are listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank’s activities at nbc.ca or via social media such as Facebook, LinkedIn and Twitter.
About J.P. Morgan
J.P. Morgan’s Corporate & Investment Bank is a global leader across banking, markets and investor services. The world’s most important corporations, governments and institutions entrust us with their business in more than 100 countries. With USD 24 trillion of assets under custody and USD 423 billion in deposits, the Corporate & Investment Bank provides strategic advice, raises capital, manages risk and extends liquidity in markets around the world. Further information about J.P. Morgan is available at www.jpmorgan.com.