R3 CEV and 8 Banks Trial Intel’s Distributed Ledger Technology ‘Sawtooth Lake’ for Bond Trading

| Updated
by Polina Chernykh · 3 min read
R3 CEV and 8 Banks Trial Intel’s Distributed Ledger Technology ‘Sawtooth Lake’ for Bond Trading
Photo: Bert Esposado/Flickr

A group of eight banks, including UniCredit, HSBC, and UBS, have finally tested a distributed ledger prototype for bonds exchange using Intel’s blockchain platform.

Blockchain startup R3 CEV and eight members of its blockchain consortium have completed the trial of the distributed ledger prototype for US treasury bonds trading. The prototype was an implementation of Intel’s proprietary blockchain platform, called Sawtooth Lake.

The banks participating in the trial include CIBC, UniCredit, ING, Societe Generale, HSBC, Scotiabank, State Street, and UBS.

Earlier this year, the R3 consortium unveiled it is developing eight different proofs-of-concept for the use of distributed ledgers for facilitation and regulation of financial transactions. R3 CEV was founded in 2015 to drive the blockchain technology adoption in the financial services sector.

To simulate the exchange of bonds on the ledger, the banks used non-cloud-based nodes that were hosted around the world in Canada, Asia, the US, Australia and Europe. In addition to Sawtooth Lake, the partners used Intel’s Software Guard Extensions (SGX), a technology that allows developers to protect code and data from disclosure.

The test, R3 noted, demonstrates how the blockchain technology can be used to support transactions in real-world markets, providing necessary scaling capabilities and a throughput of 100,000 transactions a day.

“We believe collaborative exploration of blockchain usages is key to the development of this emerging technology,” said Jerry Bautista, VP of the New Business Group at Intel. “We are excited to show how Intel technologies such as Software Guard Extensions can improve the security and scalability of blockchain deployments.”

The trial was conducted at the R3 Lab and Research Centre, which is now a centre for collaborative research and testing of distributed and shared-ledger technologies.

Tim Grant, CEO of R3’s Lab and Research Centre, commented: “Our goal at R3 is to bring our members together with the strongest technology players and work collaboratively to evaluate and accelerate this groundbreaking technology to production using real-world use cases. We are delighted to build on our strong relationship with Intel to demonstrate how distributed and shared ledgers can deliver material efficiencies throughout the full trading lifecycle of an asset.”

Intel’s platform used advanced smart contract functionality to allow trading and settlement of bonds on-chain. Besides, it enabled automated coupon payments and redemption based on third party data sources and network time. The simulation also allowed an on-chain identity registry feature to facilitate the permissioning different organizations as validators and transactors.

The live demos of the platform will be demonstrated at the SWIFT-hosted banking conference Sibos this week. Intel will also donate the Sawtooth Lake code that was used for the trial to the Hyperledger Project run by Linux Foundation.

Last month, 15 banks of the R3 consortium conducted another trial of the blockchain technology used on the Corda platform. The banks developed two prototypes to see how the technology can improve trading in the financial markets. Not long after the trial, R3 filed a patent application for Corda, a distributed ledger software underlying the Concord project.

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Polina Chernykh

Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.

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