Deutsche Börse All Set To Launch Blockchain Based Securities Lending Solution In First Half Of 2019

Deutsche Börse Group, one of the largest stock exchange in the world, recently announced the progress the company has been making in their blockchain based project with HQLA X. The two companies had joined forces in order to introduce a blockchain based solution that facilitates securities lending after the announcement that was made last year in March. The blockchain solution that is being developed uses the Corda Blockchain technology which was introduced by R3. This solution is meant to introduce efficient means for managing high quality liquid assets. The demand of this blockchain based solution rose from the regulations that have been clarified.

Financial Tools and applications have been a major application of the blockchain technology. The transparency and immutability that it provides has attracted the attention of major platforms looking to introduce more fair and secure systems, where users have autonomy and records are tamper proof. Jens Hachmeister, the person behind the blockchain initiatives being taken at Deutsche Börse Group, said:

The concrete application of blockchain technology demonstrates its significance and potential. This increases liquidity, transparency and efficiency in the financial markets in general and in securities financing in particular. We look forward to continuing to use DLT in other areas of our business.

The two companies have put the blockchain based application through a rigorous testing phase. Moreover, there are six platforms that have provided confirmation about joining the platform and have also informed that they have initiated their connectivity processes to come on board. The company has also mentioned that the platform will be launched within the first half of 2019. This is not the only collaborative effort that has been made by Deutsche Börse and HQLA X. Last year in December Deutsche Börse made an investment, in addition to acquiring a first minority interest in HQLA X. Gduido Stroemer, the CEO of HQLA X, lay emphasis on how blockchain has been a most beneficial inclusion in their corporation by saying:

The interest and commitment of the market show that Blockchain can bring tangible benefits to our industry. With Deutsche Börse, we have found the perfect partner to exploit this potential. The second investment reaffirms their commitment to our business and the common solution.

The newly developed platform will be accessed using the Eurex Repo trading system of Deutsche Börse. The infrastructure of the project puts a Trusted Third Party in charge, serving as an interface between Distributed Ledger Technology (DLT) and existing collateral management infrastructures involved, which enables the distributed ledger to provide collateral management services to all the parties involved. The post-trade service provider of Deutsche Börse Group, Clearstream, will be the depositary. Philippe Seyll, CEO of Clearstream Banking SA gave his vote of approval of all the technological progress that is being made and the successful incorporation by the company. He said:

By reducing barriers between different systems and locations, liquidity in collateral management can be significantly improved.

Keeping in view the myriad of functionalities that blockchain has created within the financial industry, handling of liquid assets through a distributed platform can really help keep the records safe and tamper proof. This platform in particular will help create trustless liquidity and collateral management solutions by leveraging R3’s Corda blockchain that might integrate all the beneficial features of blockchain within the application. The possible use cases of decentralized systems within the financial industry are truly endless. Granted there are still a few barriers that are withholding a mass adoption or migration to the nascent technology, but given the piqued interest of the financial sector in it due to the security and trust it provides, it can be assumed that we are on our way to it.

Hassaan Malik

Co-founder of BlockPublisher, Hassaan is a technologist at heart with a keen interest in blockchain, cryptos and traditional financial markets. Email: hassaan@blockpublisher.com, hassaanmalek@gmail.com

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.