First Canadian dollar fixed income issuance by a major bank in Canada
testing blockchain technology
TORONTO, Aug. 15, 2018 /CNW/ - BMO Capital Markets today
announced that it has successfully launched a pilot fixed income issuance transaction, mirrored on a blockchain platform
alongside leading pension fund investor Ontario Teachers' Pension Plan (Ontario Teachers').
The transaction included Bank of Montreal as the issuer and Ontario Teachers' as the buyer of
a CDN$250MM 1-year floating rate Deposit Note, making it the first Canadian dollar fixed income issuance demonstrating the
viability of blockchain platforms.
The pilot transaction – booked as a traditional Canadian Depository for Securities (CDS) issuance and successfully paralleled
through the blockchain – was conducted to demonstrate how smart contracts and blockchain could be used for fixed income
markets.
BMO Capital Markets designed and built a blockchain issuance system using open source blockchain infrastructure with the goal
of testing a next generation settlement system. The prototype allows the security issuer and buyer to view the transaction on the
blockchain and verify the accuracy of the term sheet information and payment amounts until maturity of the fixed income security.
The technology is intended to enable cost reduction in several areas including compliance, financial reporting, security clearing
and settlement of cash transactions.
"This is an important first step in developing a fully functional blockchain capability that we think will eventually allow
primary and secondary trading of securities," said Kelsey Gunderson, Head of Global Trading, BMO
Capital Markets. "We understand the potential that blockchain brings to the capital markets and we look forward to continuing to
drive innovative solutions to help our clients."
"Ontario Teachers' is committed to exploring technology and innovations that might improve our ability to serve our members,"
said Audrey Gaspar, Ontario Teachers' Managing Director, Treasury and Integration. "We are pleased
to partner with Bank of Montreal in this pilot blockchain initiative."
Building on the successful launch of the prototype, BMO Capital Markets will look to continue to partner with clients and
other institutions in the evolution of blockchain as an open settlement system.
About BMO Capital Markets
BMO Capital Markets is a leading, full-service North American-based financial services provider offering corporate,
institutional and government clients access to a complete range of products and services including equity and debt underwriting,
corporate lending and project financing, merger and acquisitions advisory services, securitization, treasury management, market
risk management, debt and equity research and institutional sales and trading. With approximately 2,500 professionals in 30
locations around the world, including 16 offices in North America, BMO Capital Markets works proactively with clients to
provide innovative and integrated financial solutions.
BMO Capital Markets is a member of BMO Financial Group (NYSE, TSX: BMO) one of the largest diversified financial services
providers in North America with $744 billion total assets as at April 30, 2018.
About Ontario Teachers' Pension Plan
The Ontario Teachers' Pension Plan (Ontario Teachers') is Canada's largest
single-profession pension plan, with $189.5 billion in net assets at December 31, 2017. It holds a diverse global portfolio of assets, approximately 80% of which is managed
in-house, and has earned an average annualized rate of return of 9.9% since the plan's founding in 1990. Ontario Teachers' is an
independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region
office is in London. The defined-benefit plan, which is fully funded, invests and administers
the pensions of the province of Ontario's 323,000 active and retired teachers. For more
information, visit otpp.com and follow us on
Twitter @OtppInfo.
SOURCE BMO Financial Group
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