BMO Bank And Ontario Teachers Pension Plan Test Blockchain Tech To Cut Costs
BMO And Ontario Teachers’ Test Canadian Debt Issuance Using The Blockchain Technology
The Bank of Montreal (BMO) has recently reunited with the Ontario Teachers’ Pension Plan to test a Canadian dollar debt deal using the blockchain technology. This is another step to determine how viable it can be to use this new distributed ledger technology in fixed-income markets in Canada.
Recently, The Bank of Montreal sold C$250 million ($190 million) of one-year floating deposits to the Teacher’s Ontario Pension fund by using the blockchain technology as a way to make the transaction.
According to the bank’s BMO Capital Markets unit, the institution has built a settlement system using the blockchain tech and the prototype allows the issuers and buyers to view transactions that have been made on the system.
Cuttings Costs Using The Blockchain Technology
The main reason why the bank tried to use this technology to make transactions with the Canadian dollar was because it aimed to cut costs. Using the blockchain can, in some cases, help to prevent high costs in areas like financial reporting, clearing, compliance and even in the settlement of cash transactions.
According to Kelsey Gunderson, the head of global trading at BMO Capital Markets, this step is very important for the development of the blockchain in the country and will eventually allow primary and secondary trading of securities using the technology.
This move from the Bank of Montreal follows other pilot projects that are similar. For instance, JPMorgan and the National Bank of Canada have recently tested a USD debt deal using the blockchain tech back in April. This initiative was considered to be a first in North American soil.
The National Bank of Canada has also sold $150 million using one-year floating rate certificates with the help of JPMorgan and blockchain.