Sberbank announced that is the first in Russia to have obtained a patent for a repo deals solution and an execution system that utilize distributed ledger technology. The solution was developed by the bank only.
With the all-new solution, the parties to a deal can register the terms of a repurchase agreement inside a self-executable decentralized environment, i.e. sign 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 being 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 said system covers the entire end-to-end process, which puts off the table the issues of reconciliation and controversies between the parties, thus reducing risks for the bank and making financing more affordable for clients.
Andrey Shemetov, Vice President, Head of Global Markets, Sberbank,
“The solution we’ve designed is the first demonstration of what blockchain technology is capable of when it comes to modeling a comprehensive financial product such as repo. Sberbank has proved that new decentralized infrastructure can be built on blockchain, letting parties of the most complicated financial deals work directly with each other without any mediators.”
„Though Libra has met with fierce resistance from central banks and supervisory authorities and might never see the light of day, in many other cases tech firms (both start-ups and established big players) have successfully captured bits and pieces of universal banks’ traditional value chain. This trend may only intensify in the coming years. In this environment, European banks remain squeezed.”