Spanish bank BBVA was sole bookrunner to a $150 million syndicated loan deal, the first transaction of its kind to be completed on a blockchain.
The Financial Times reported on Tuesday that BBVA used blockchain technology to arrange a $150m syndicated loan for Red Eléctrica, the Spanish grid operator, along with co-lenders MUFG and BNP Paribas. The legal advisers to the deal were Linklaters and Herbert Smith Freehills.
A syndicated loan is needed where a loan is too large or risky to be accepted by single lender, instead involving two or more lenders to spread the risk.
Making use of the Ethereum platform and well-known cross-industry consortium Hyperledger, the technology was used to record each step of syndicated agreement process, and ultimately store the contract signatures for all parties.
Integrating distributed ledger technology allowed the whole negotiation process to be completed on a shared private blockchain network, allowing each party to exchange information in real time and ensure all information was secure. This enabled a process, which traditionally occurs over a couple of weeks, to only take two days.
In addition to the time saving benefits, carrying out a transaction using blockchain technology can heavily reduce the level of back office and operational costs involved, Ricardo Laiseca, BBVA’s head of global finance, tells the FT.
The Linklaters team was led by Banking partner Juan Barona and included managing associate Francisco Sáinz-Trápaga and associate Elisa de Mollinedo.
Meanwhile, UK lender NatWest, in collaboration with fintech company Finastra and consortium R3, has developed a similar platform using R3’s blockchain platform Corda to create an online marketplace for syndicated lending. Whilst no transactions have yet been completed, the product is expected to live on the 17th November.
The end of last week brought the second ever annual report from the Securities and Exchange Commission’s (SEC) Enforcement Division, which outlines the organisation’s activity over 2018 and details the significant actions and initiatives that took place.
Access the full report here or read on for a list of the key takeaways.
The SEC instigated a total of 821 enforcement actions over 2018, which led to over $3.9 billion in disgorgement and penalties. The regulator also returned $794 million to affected consumers.
One of the two main priorities for the SEC in 2018, over 225 cyber-related investigations were launched and the US regulator filed its first ever charge concerning the risk of identity theft. Under the charge, a settlement was demanded from an investment adviser due to its poor cyber policing that ultimately compromised the personal information of thousands of its customers.
The second of its two main priorities for the year, the SEC has focused on handling cases alleging misconduct against retail investors.
This led to over half of the standalone enforcement actions brought by the SEC in 2018 concerning wrongdoing against retail investors. This was largely achieved by the Retail Strategy Task Force, formed this year, with the aim to address the types of misconduct that most affect retail investors.
A much bigger feature in the annual report compared to 2017, digital assets and initial coin offerings (ICOs) were high on the SEC agenda this year.
The US watchdog brought 20 standalone cases for cyber-related misconduct, over a dozen of which involving digital assets and ICOs. A key objective was to raise awareness around these new products, specifically targeting the potentially unlawful promotion of ICOs by celebrities, and the risks associated with online trading platforms for digital assets.
Whilst the SEC continued to make charges against individuals, a major development in attempting to improve the effectiveness of enforcement action was the new ‘undertakings’ requirement i.e. making individuals take affirmative steps to become more compliant.
Chief executives of healthcare company Theranos and carmaker Tesla were both handed undertakings following settlements with the SEC.
In conclusion, the SEC’s impact on the financial sector wasn’t much of a contrast in comparison to its activity last year, however, the regulator suffered a hiring freeze for the most part of the year, which would suggest their efforts have been significant, given the staffing challenges.
Financial services contentious regulatory partner Rosemarie Paul moves to Ropes & Gray, departing her former role as a partner at Akin Gump Strauss Hauer & Feld in London.
Darren Jones has joined Eversheds Sutherland as a partner and head of service excellence for its company commercial practice group in London. Previously at Barclays, Jones advised teams on law tech, legal service delivery, and legal automation.