IBM and SBI Securities test bond trading on the blockchain

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SBI Securities is working with IBM on testing blockchain, the distributed ledger made popular by its use with cryptocurrency Bitcoin, for use in the bond trading market, the two companies announced Friday. The goal of the collaboration is to open up the potential for commercial use of the technology in the securities space sometime in the future.

According to a press release from IBM, the blockchain technology could set the stage for a new kind of trading system. However, currently, SBI Securities is simply testing the complexity of blockchain relative to its effect on actual operations.

The test will make use of the Hyperledger Fabric, the open standard for distributed ledgers set forth by the Hyperledger Project. The project is a collaborative effort that works on challenges associated with commercial adoption of blockchain technologies.

SEE: IT leader’s guide to the blockchain (Tech Pro Research)

In the press release, it was noted that SBI Securities is currently evaluating the application of blockchain in the following aspects of bond trading:

  • Entire product cycle of registering a bond until its reimbursement
  • Improved efficiency and automation of operations by sharing databases
  • Possibility of reduced infrastructure costs by sharing among the parties involved
  • Possibility of substituting the existing operational processes
  • Evaluation of blockchain technology for securities operations and systems

“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,” Hiroyuki Ogawa, executive officer for SBI Securities, said in the press release.

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SBI Securities will be working specifically with IBM Japan, which will provide SBI Securities with access to its IBM Bluemix Garage for Blockchain in Tokyo, consulting services, and research, the press release said.

“As an innovative technology, blockchain has the potential to revolutionize ways businesses work together with their ecosystem of trading partners. The technology establishes accountability and transparency while streamlining business processes,” Takeshi Fukuda, director of IBM Research, Tokyo, said in the press release.

IBM has been experimenting with blockchain technology for sometime, recently working on bringing it to mainstream businesses back in February 2016. Other big tech companies like Microsoft have also thrown their weight behind the technology, with Microsoft partnering with the R3 Banking Consortium to work on blockchain solutions for their members in April.

The 3 big takeaways for TechRepublic readers

  1. SBI Securities will work with IBM Japan to test the blockchain ledger technology for its use in bond trading operations.
  2. The work done by SBI will make use of standards developed by the collaborative Hyperledger Project, of which IBM has also worked with.
  3. Blockchain has gained traction with other financial services organizations like the R3 Banking Consortium, and other tech giants like Microsoft.

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