TECHNOLOGY

Japanese banks target blockchain use in derivatives contracts

Nomura and Mizhuo Financial will join other Japanese banks in testing a blockchain platform for derivatives contracts.

By Joe Parsons joe.parsons@strategic-i.com June 02, 2017 10:19 AM GMT
A group of Japanese banks, including Nomura and Mizhuo Financial, have begun testing a blockchain platform developed by R3 to streamline derivative contract negotiations.

The banks, also involving Sumitomo Mitsui Banking Corporation and Daiwa Securities Group, successfully tested a prototype of the platform developed by Corda, a distributed ledger technology platform based on blockchain.
The platform has been designed to remove the use of emails when negotiating OTC derivatives contracts, while ensuring terms and conditions can be securely recorded and stored on the blockchain platform.

According to a release from Nomura, “the group plans to identify other areas where this technology can be applied, such as other contract negotiation processes and product development.”

As part of the development process, all five banks will participate in identifying business requirements, with Nomura and Daiwa Institute of Research leading the development of a distributed application built on Corda.

The launch of the platform follows a record $107 million investment into R3 by 40 major institutions, including Barclays, Bank of America Merrill Lynch, HSBC, BNY Mellon, Citi, BNP Paribas and Deutsche Bank.

The $107 million funding round is the largest blockchain investment to date, R3 said, and the funds will be used to accelerate technology development.