In a unique transaction that took place on Friday, the press of a button is all it takes to switch from an old world of centralized clearing houses to a frontier of the regionalized blockchain.
ResonanceX’s new notes
Chartered Opus, is one of the firms that issue two distinct structured notes. Both of these notes were made by ResonanceX, which is an investing platform established by Guillaume Chatain, a previous JPMorgan Chase managing director. First of these notes will be settled in an old-fashioned way, on Clearstream, a renowned European clearing house.
Secondly, otherwise, the same note will be listed, cleared and settled on the public Ethereum blockchain. The issuer only needs to choose a different option on the ResonanceX dashboard’s drop-down menu to change this parameter.
The corresponding issuance will put the idea to the test, based on apples-to-apples, that blockchain provides a less costly way for clearing and settling financial instruments. Again if that proves to be true, ResonanceX, it will allow the future issuers to pick one over the other quickly like they were changing an order on Amazon.
Transaction of the note
Despite the removal of the many intermediaries in today’s issuance, the structured product was far from being straightforward.
To begin with, it’s essential to know that the private placement note, which has a value that is not being disclosed, wasn’t denominated in the ether, ethereum’s native token of.
As an alternative, the British pounds got “tokenized,” through a blockchain startup referred to as Nivaura’s technology. This means the tokens that represented the pounds that were issued to investors, and the cash was deposited and stored in the accounts at the Bank of New York Mellon as well as the U.K.’s Metro Bank.
The private key custody for the blockchain clearing and settlement was provided for through the Nivaura’s custody approvals.
The investment itself is linked to the FTSE 100 index and is a principal protected note. What it means is that if the FTSE is up 2.5 percent by the time the note matures in about two months, investors receive back their principal in addition to a return equaling to 13 percent annually. On the chance that the index doesn’t increase 2.5 percent, investors will still receive their principal back, but without gain.