Russia's Sberbank Uses Smart Contract to Settle Three-Way Repo Deal

State-owned Russian bank Sberbank has completed a repurchase agreement, or repo, using blockchain technology.

Thursday that, with participation from Region Brokerage Company and the country's National Settlement Depository, it settled the "World's first" three-way over-the-counter repo using a smart contract.

For the trial, Sberbank acted as the seller, Region as the buyer and the NSD as a settlement agent.

The deal was for a Russian rouble-denominated OTC repo secured by government loan bonds.

Utilizing blockchain allowed the three parties to automate various parts of the process, including the execution of margins, settlement and repository reporting.

The deal was governed by local laws and was a binding financial contract that was signed electronically using a smart contract, the bank said.

"The combination of smart contracts and distributed register technology makes financial contracts more transparent and increases security for both clients and the bank."

Financial institutions elsewhere are also exploring blockchain as a means to settle transactions in various financial instruments.

Just yesterday, four European banks - Commerzbank, ING, Natixis and Rabobank - settled a live transaction for a short-term debt instrument on the Corda platform developed by blockchain consortium startup R3. And, last month, Singapore's central bank and the country's stock exchange developed.

A settlement system using smart contracts to simplify post-trade processes and shorten the settlement cycle.