1. EXECUTIVE SUMMARY
Since 2007, the financial markets have been facing an erosion of trust and the regulators have put a lot
of pressure on incumbents for achieving ever greater transparency, better management of risks and
higher capital requirements.
The new sharing economy and the Fintech emulation coupled with an ecosystem that has never been
more challenged by technological innovations have started to give the market a glimpse of the
possibilities of how innovations could answer those challenges.
The idea of a decentralised ecosystem endorsed by the blockchain technology has started to flourish
and the experts are now mentioning a revolution that will create a real paradigm shift of the financial
markets.
The blockchain technology otherwise known as distributed ledger technology (DLT) has been invented
to enable Bitcoin transactions, in a fully decentralised and transparent approach. However, the
potentiality of the Blockchain as a transformative technology is going far beyond the Bitcoin application,
but no consensus has been reached on whether and how it should be applied to other markets. This
research’s objective is to study the viability of the blockchain technology for bond trading.
The inefficiencies related to both the bond market and the bond trade life cycle are still many. From a
macroeconomic perspective, the bond market is very complex and lacks of transparency, due to the very
nature of the securities and the way they are traded OTC. On a micro level, the inefficiencies of the bond
trade life cycle encompass a lot of manual work and duplication of efforts, engendering risks and high
costs.
This paper aims at analysing if and how the Blockchain could answer those inefficiencies whilst
enhancing transparency, touching on the potential roles’ redistribution of the counterparties involved in
the bond trade life cycle. Thus, we will explore the following questions: How the blockchain technology
could impact the bond trade life cycle? What would be the impact of a distributed ledger on the risks

2. related to OTC bond trading? Would the blockchain technology allow the whole post-trade process to be
more efficient and in what ways? How would the Blockchain impact the whole architecture of the
industry? Would the benefits earned from the technology implementation be higher than the costs?
What are the challenges related to the technology itself and to its implementation?
Four key findings stemmed from our research, interviews and analysis:
1/ There is an increased interest in the Blockchain and its potentiality;
The blockchain technology is going mainstream and its potentialities are worth exploring for bond
trading.
2/ DLTs as an answer to the inefficiencies inherent to the current bond trade life cycle;
DLT could address the inefficiencies of the bond trade life cycle by offering speed, security, lower risk
and cost reduction and we established that the blockchain technology would have a major impact on
three areas: IDENTITY, SETTLEMENT and COSTS.
3/ Several critical challenges need to be addressed when thinking about implementing a DLT for bond
trading.
The paper outlines many challenges related to the implementation of the blockchain technology for
bond trading. Those challenges are dealing with IDENTIFICATION, ANONYMITY, CONFIDENTIALITY,
VALIDATION of transactions, SCALABILITIY issues, SECURITY issues, OPERATIONAL CHALLENGES,
COLLABORATION and GOVERNANCE and REGULATIONS.
4/ Smart contracts can facilitate the integration of the Blockchain for bond trading.
Finally, the research reveals the importance of the smart contracts for bond trading.

3. The author concludes that the question is not anymore whether the technology is viable but rather
when it will be ready for implementation and fully operational. Indeed, she believes that the concept of
Distributed Ledger Technology is still in its infancy but its potentialities offer great possibilities. The
implementation of the technology will take place progressively, dealing first with internal processes
before being adopted market-wide.
Therefore, a set of three recommendations has been drawn to help incumbents place the distributed
ledger technology at the heart of their strategy:
1/ Build your innovation strategy and organize the firm
2/ Participate in consortia
3/ Use an agile methodology to develop, test and improve
The Blockchain revolution is on its way and, although we cannot predict the future, we firmly believe
that it has the potential to dramatically reshape the capital markets, with significant impact on business
models.
We offer this reflexion to the readers to help them craft their own opinion and give them some tools we
believe useful to successfully join and thrive in this new exciting era.