French bank BNP Paribas’ Securities Services, its custody arm, has unveiled a blockchain platform that will enable private companies to lend money to business using mini-bonds in exchange for company shares.
In an announcement today, BNP Paribas has announced a new blockchain platform that will enable investors to issue mini-bonds for private company shares, as reported by Financial News.
Mini-bonds are effectively a means for individuals or companies to lend money to businesses, directly. Unlike traditional bonds, they must be held until they mature. In other words, they cannot be cashed in early.
The BNP Paribas blockchain in this instance, developed at its Securities Services digital lab, will record all mini-bonds issued and transferred through the platform. In a nod to the technology, BNP Paribas sees quicker and more efficient transactions enabled by blockchain.
As reported by the publication, Marc Younes, head of business development at the bank’s Securities Services’ Innovation & Digital Lab stated:
Blockchain technology is particularly suited to the fundraising needs of private companies as transactions volumes are typically lower than for listed companies. This technology could also serve to standardize processes around the trade lifecycle of mini-bonds.
The endeavor took shape after a French government ruling that allowed private companies to use crowdfunding platforms to issue mini-bonds. The bank is partnering renewable energy crowdfunding startups Lendosphere, Enerflip and Lumo for the offering.
In April this year, the bank partnered with Paris-based crowdfunding platform SmartAngels to pilot the use of blockchain technology for funding startups and small and medium-sized enterprises (SMEs). The pilot project is the first of its kind in France, allowing unlisted firms to issue shares to investors.
The new distributed ledger platform that focuses on mini-bonds is set to launch by endo f 2016 following regulatory approval by French authorities.
BNP’s Securities Services arm is also a part of a seven-member French consortium formed in June this year that is exploring blockchain technology to develop post-trade settlement services for SMEs.
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