Japan’s SBI Securities has teamed up with IBM to test the potential of blockchain technology for a new type of bond trading platform.

Using Hyperledger Fabric technology, SBI will test the entire product cycle of registering a bond until its reimbursement; make improvements in efficiency and automation of operations by sharing databases; reduce infrastructure costs by sharing among the parties involved and evaluate the use of blockchain technology for securities operations and systems.

Hiroyuki Ogawa, executive officer at SBI Securities, said: “This test aims to scrutinise barriers or complexity for practical use, develop a plan for deployment, and accumulate knowledge through applying blockchain technology to our products.

“Adopting the Hyperledger Fabric, an open technology platform, and working together with IBM Japan, we expect that this verification test will speed the rate of adoption of blockchain technology in the financial trading area.”

Takeshi Fukuda, director of IBM Research in Tokyo, added: “As an innovative technology, blockchain has the potential to revolutionise ways businesses work together with their ecosystem of trading partners. The technology establishes accountability and transparency while streamlining business processes. We are delighted to work with SBI Securities to create innovative solutions for financial industry.”

The announcement comes just a month after eight R3 consortium members, in collaboration with Intel, successfully tested a distributed ledger prototype for bond transactions.

That trial, which was carried out in R3’s Lab and Research Centre, used US treasury bonds to demonstrate how blockchain technology could support trading in real-world financial markets, delivering the necessary scalability to support more than 100,000 transactions per day.

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