Securities settler Euroclear building a blockchain solution for commercial paper

Belgium-based securities settlement house Euroclear is developing an end-to-end blockchain solution for the issuance and settlement of European Commercial Paper (ECP).

Euroclear announced the news Wednesday, saying that the proposed solution is being built in association with nonprofit lending institution European Investment Bank (EIB), Spanish commercial bank Banco Santander and “Big Four” professional consulting firm EY.

The blockchain solution aims to reduce operational costs and time taken to issue ECP, as well as to provide transparency and traceability of ECP issuance related activities, according to the announcement. An ECP is an unsecured, short-term loan issued by a bank or corporation in the international money market.

“Our ambition is to deploy an efficient blockchain powered solution that supports further growth of intra-day issuance for ECP markets,” said Edwin De Pauw, head of data services and innovation at Euroclear.

The four firms have already completed a “proof of value” for issuing and settling of ECP. ”This proof of value further validates the potential impact of blockchain technology on the securities issuance process, where there is a huge opportunity to introduce efficiencies, reduce time-to-market and improve the experience for issuers and investors,” said John Whelan, head of digital investment banking, Banco Santander.

Euroclear further said that it plans to move the initiative to pilot phase "soon" based on its success and that other ECP issuance companies have also shown interest in joining the project.