Financial institutions around the world have shown a keen interest in blockchain technology. Deutsche Bourse is experimenting with a blockchain-based securities lending platform.
This first live trial was conducted successfully with the help of Credit Suisse, UBS, and Commerzbank.
Deutsche Bourse Pushes Forward
As part of the transaction, a basket of German government bonds and corporate bonds were transferred between Commerzbank and UBS. The custodian overseeing this DLT-based transfer is Clearstream Banking.
Following that process, a cross-custodian swap between different network participants was executed.
This aspect saw Credit Suisse and UBS change ownership of bonds without effectively transferring the physical securities between the collateral agents.
This change of ownership was recorded successfully on Deutsche Borse’s HQLAx DLT platform.
Commerzbank’s Peter Schmidt adds:
“HQLAx delivers a fascinating approach to overcome the fragmented post-trading landscape. It enables treasury departments to manage their collateral pools more efficiently by significantly reducing the settlement cycle and avoiding resource-intensive collateral movements. It is a first but important step toward a new ecosystem where tokenized assets can be traded in a DLT environment.”
It is believed Deutsche Bourse has 15 additional partners lined up to take full advantage of its HQLAx platform.
Some of those partners include Citi, Goldman Sachs, ING, and CIBS, all of whom are well-respected players in the financial industry.
Deutsche Bourse is confident their blockchain-based securities lending platform will keep improving over time.
Combining new technology with legacy market infrastructure is not an easy process.
Contrary to what some might have expected, the financial market has responded positively to this hybrid approach by Deutsche Bourse.