Central Banks Bonds Issuance Platform
The Challenge
This endeavor was a collaboration between QuantumX and key financial institutions: the Central Bank of Chile (BCCh) and the Central Securities Depository (DCV), aiming to redefine the Central Bank Bonds Issuance Platform.
Across the globe, central banks have been on a quest to streamline their securities issuance process.
For more than 8 years, the European Central Bank, the Bank of England, the Reserve Bank of Australia, and many Central Banks from Asia such as in Singapore (MAS), China, India, Thailand, the Philippines, among others, have been pioneering efforts to incorporate advanced technologies and innovative practices.
This global endeavor aims to enhance efficiency, transparency, and security in financial markets, reflecting a shared commitment to adapting to the digital age while navigating the challenges posed by traditional frameworks and the need for regulatory compliance.
+90% of the world’s central banks worldwide are actively exploring innovative technologies to enhance payments and capital markets systems.
QuantumX, with its profound technical and business acumen, stepped in to address these challenges, crafting a solution in concert with the BCCh and DCV that promises a seamless, efficient future.
QuantumX's solution leverages cutting-edge technology, marking a pioneering initiative in Latin America
Taking on the challenge
In full alignment with QuantumX’s technical expertise and deep business insight, we introduced a conceptual model aimed at redefining the issuance process, taking into account the entire bond life-cycle.
This model emerged from extensive collaboration with various departments within the Central Bank of Chile (BCCh) and the Central Securities Depository (DCV).
Following a successful Proof-of-Concept phase, we progressed to develop an industry solution based on a prototype platform. Additionally, this project delved into exploring disruptive technologies like blockchain for the representation of both bonds and the Chilean peso.
Our Solution
01
Full process coverage
QuantumX solution covered the whole issuance process considering:
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Bond issuance
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Coupon payments
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Repurchases
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Final maturity
03
Streamlined operations
The platform integrated seamlessly with Current Open Market Operations System (SOMA) and BCCh high-value payment systems (LBTR) using the SWIFT standard messaging (ISO 15022), facilitating streamlined operations
02
Compliance and efficiency
QuantumX solution ensures compliance and efficiency, with a system that offers controlled access, safeguarding transaction integrity
04
Encryption protocols
To enhance confidentiality and privacy, fiat currency was transformed into digital notes using specific contracts and encryption protocols. Balances and transactions were encoded in a way that prioritized confidentiality, maintaining a high level of anonymity
05
Blockchain integration
The prototype platform considers an innovative integration with the Ethereum blockchain, testing the establishment of a functional mirror network for executing the bonds issuance on-chain in parallel with the traditional issuance
Conceptual Model
Current systems were replicated by functionalities that send/receive SWIFT messages to/from the platform through the DLT Manager. The DLT Manager reads and translates the information to trigger several automated processes inside the Platform.
The conceptual model covered the whole bond life-cycle process:
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Issuance, 2. Coupons payment, 3. Redemption, 4. Maturity
Note:
1. IMPs stands for “Instituciones del Mercado Primario”, which refers to institutions allowed to buy the Central Bank’s bonds in the primary market (banks, insurance companies, pension funds, brokers, among others)
Key Results
Bond settlements took place within seconds, in contrast to the 2-3 business days required by conventional systems
Ensured the confidentiality of all transaction, while maintaining anonymity, which was crucial for this specific use case
Facilitated robust privacy and seamless interoperability for direct integration with a secondary market, catering to increased transaction volumes
First company in Latin America that has tokenized the bonds and the currency of a central bank
Participants
In this project, +40 team members were involved, from both the BCCh & DCV, with active participation from different areas within each institution, where QuantumX played a crucial role in leading and coordinating each participant in an efficient and effective manner.
