Euroclear to press ahead with blockchain pilot for commercial paper

LONDON (Reuters) - Securities house Euroclear said on Wednesday it would push ahead with building a pilot blockchain-based platform for issuing and settling commercial paper transactions used by companies to grease the wheels of the economy.

The $1.2 trillion European commercial paper (ECP) market refers to short-term securities issued by large companies and banks to avoid cash crunches when they need to pay staff or meet other short-term obligations.

Brussels-based Euroclear said that it, along with the European Investment Bank, Spain’s Santander bank and consultants EY completed a “proof of value” study into an end-to-end blockchain platform for issuing and settling of European commercial paper.

“Based on the initiative’s success, Euroclear intends to move on to pilot phase soon,” Euroclear said.

“Other ECP issuance institutions have expressed interest and will be invited to participate in the pilot phase.”

Euroclear is one of the world’s biggest settlement houses which handles the final leg of a financial transaction, whereby legal ownership and cash for a transaction are swapped.

Using blockchain, the technology that underpins crypto-currencies like bitcoin, would replace time-consuming bilateral processing between multiple market participants with one consolidated hub.

“Other key benefits of this blockchain solution would be full transparency and traceability of ECP issuance related activities... in making ECP same day issuance a new market standard,” Euroclear added.

Reporting by Huw Jones; editing by Emelia Sithole-Matarise