Two funds have completed what is believed to be the first secondary market securities trade on notes digitised on the ILSBlockchain, a private blockchain set up by Guernsey incorporated cell company Solidum Re.
Solidum Partners, on behalf of one of its funds, set up a trade on the ILSBlockchain wishing to sell some of its holdings, which resulted in the blockchain software producing a cryptographic key representing the trade.
The trade, complete with the key required to execute the opposing side of the trade, was advertised on a platform set up and run by Solidum Re, and emails were sent out to all registered participants on the blockchain.
A participant with sufficient US dollars was able to directly execute the trade on the ILSBlockchain, which within a single ‘atomic’ transaction, debited their wallet with the required US dollars assets and credited their wallet with the notes.
Within the same transaction, the Solidum fund’s wallet was debited of the offered notes and credited with credited with the US dollars.
Solidum Re director Cedric Edmonds said the trade was created, executed and confirmed in a matter of minutes without any fees involved or the use of a bank or broker-dealer.
Edmonds commented: “The transaction was simpler, quicker and more efficient than a standard Depository Trust Company/Euroclear trade. We were delighted at how everything worked effortlessly and flawlessly as planned. Solidum can now, via the trustee, arrange for the US dollars assets its fund now holds on the ILSBlockchain to be wired to its fund’s ‘real-world’ custody account.”
In August, Dom Re IC, the insurance-linked securities (ILS) reinsurance transformer and incorporated cell of Solidum Re ICC, issued the first notes to be digitised on a private blockchain.
The incorporated cell issued $14.8 million in principal-at-risk, participating notes—an asset-backed securitisation of a reinsurance contract—to a total of six investors.
According Guernsey Finance chief executive Dominic Wheatley, the trade represents an example of the evolution of the future of finance.
He added: “This latest step forward in the advancement of blockchain is testament to that and we look forward to seeing more trades follow in this way.”
