Bank of Montreal and Ontario Teachers’ Pension Plan tested a Canadian-dollar debt deal over blockchain, a further step in determining the viability of the new technology in fixed-income markets.

Bank of Montreal (BMO.TO) sold $250 million of one-year floating rate deposit notes to the Ontario pension fund and used blockchain technology to mirror the transaction, the Toronto-based lender said Wednesday in a statement. The bank’s BMO Capital Markets unit built a settlement system using blockchain, with the prototype allowing issuers and buyers to view transactions on the distributed ledger system.

The technology, which the bank says is being used for the first Canadian dollar fixed-income issue, aims to cut costs in areas including compliance, financial reporting, clearing and settlement of cash transactions.

"This is an important first step in developing a fully functional blockchain capability that we think will eventually allow primary and secondary trading of securities," Kelsey Gunderson, head of global trading at BMO Capital Markets, said in a statement.

Bank of Montreal’s move follows other banks in pursuing similar pilot projects. JPMorgan Chase & Co. (JPM.N) and National Bank of Canada (NA.TO) tested a U.S. debt deal over blockchain in April in what was heralded as a North American first. National Bank sold US$150 million of one-year floating rate certificates of deposit and mirrored the sale process through a blockchain application developed by JPMorgan.

In Europe, Daimler AG issued the first security using blockchain in a 100 million euro (US$79 million) deal in June 2017. A German unit of Telefonica SA also sold bonds in euros using blockchain, a first for the phone carrier. Credit Suisse Group AG, U.S. Bancorp, Wells Fargo & Co. and Western Asset Management Co. in January successfully tested the distributed ledger technology as a way to standardize the data involved in securitized home loans and make it more transparent.