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SBI Securities and IBM Announce Bond Trading Blockchain Trial

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IBM is establishing itself as a leader in the world of distributed ledger technology and they are slowly taking steps toward applying blockchain technology to real-world use cases. Through a new partnership with SBI Securities, they will collaborate on testing the potential of blockchain technology for bond trading. Depending on the success of this proof of concept, it is expected SBI Securities will commercialize the technology at a later stage.

The number of use cases for distributed ledgers in the financial sector seems virtually limitless. Now that SBI Securities and IBM will trial this technology for bond trading purposes, a new use case has been established. At the same time, it remains to be seen how viable such a transparent system can be in the long run.

Bond trading is subject to some complex operations and barriers to entry. By embracing new and innovative technologies, both companies want to address these issues. However, the trial of blockchain technology will go much further than the onboarding process, as SBI Securities wants to apply it to actual operations as well.

In fact, there will be five main points of focus that this partnership wants to examine. First of all, a distributed ledger will be used for the entire product cycle of registering a bond, issuing it, and reimbursing it. Secondly, this technology is expected to improve efficiency and automation of all bond trading operations. All databases and information will be shared amongst multiple parties.

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Depending on the result of these two primary functions, the teams will then investigate whether or not blockchain can cut infrastructure costs as a whole. If that answer is positive, the application of blockchain technology will be taken to the next level, and the blockchain-based system will replace the current bond trading infrastructure altogether. Last but not least, there will also be a strong focus on evaluating the blockchain for securities operations.

SBI Securities Executive Officer Hiroyuki Ogawa stated:

“This test aims to scrutinize barriers or complexity for practical use, develop a plan for deployment, and accumulate knowledge through applying blockchain technology to our products. Adopting the Hyperledger Fabric, an open technology platform, and working together with IBM Japan, the leader in this area, we expect that this verification test will speed the rate of adoption of blockchain technology in the financial trading area.”

 

Financial experts seemingly have come to terms that blockchain can revolutionize the way business is conducted on a global scale. Distributed ledgers offer accountability and transparency, while potentially reducing costs and enabling automated processes, driving efficiency gains across a variety of industries. A recent IBM study highlights these ideas, and points out how early adopters can benefit from embracing this technology at an early stage.

IBM Japan will support SBI Securities during this proof of concept, and grant access to all of its global resources. This is another validation of the change that will transform finance in Japan. Not only are consumers and enterprises warming up to Bitcoin, but the country’s institutions are looking to unlock the benefits of blockchain technology as well.