German capital markets giant Deutsche Börse has created a dedicated ‘DLT, Crypto Assets and New Market Structures’ department for exploring the application of blockchain technology.
Deutsche Börse has been exploring different applications of the blockchain for a while, the firm said in a press release. The German-based exchange had co-operated with international central securities depositories on how to use smart contracts for mobilizing scarce collateral as well as the creation of a functional prototype of a blockchain based settlement of securities with Deutsche Bundesbank.
Jens Hachmeister, Managing Director of the DLT, Crypto Assets and New Market for Deutsche Börse said the exchange has been active with the blockchain in a first phase of “ideation and exploration.”
“We invested in various initiatives to create a sound understanding of the trends, the technology, and its potential within the traditional segments of our value chain,” he added.
Deutsche Börse has also expanded its partnership with HQLAx following an acquisition which was sealed after it made an initial investment of a single-digit euro million amount in HQLAx—the liquidity and collateral management firm building a blockchain based operating model for securities lending
As part of the investment, Deutsche Börse Group has been afforded two board seats at HQLAx with Philippe Seyll and Jens Hachmeister as its representatives.
Seyll is expected to bring his expertise to bear on the board as the Group’s Global Securities Financing business while Jens will be saddled with the responsibility of overseeing blockchain initiatives.
The partnership has been anticipated since March this year after Deutsche Börse announced its proposed collaboration with HQLAx in building a fully integrated operating model for security lending transactions while exploiting blockchain technology developed by the R3 consortium.
The on-boarding process with an initial set of banks began five months ago, and this has been buoyed with detailed discussions with relevant regulatory authorities. Plans are also geared towards acquiring further shareholding as the years comes to an end.
‘’This collaboration will enable us to create a true blockchain-based solution in the post-trade arena. Together with like-minded partners such as HQLAx, we want to create a standardized lending marketplace‘’ commented Phillip Seyll, co-CEO, Clearstream Banking.
While speaking further, he pointed out the importance of the collaboration in the efficient redistribution of collateral liquidity.
‘’It will allow market participants to redistribute collateral liquidity more efficiently by improving interoperability for pools of securities residing in multiple, disparate settlement systems and locations.’’
The R3 Corda platform is not novel to HQLAx. The company successfully initiated the first securities lending transaction between Credit Suisse and ING with the use of the R3 Corda platform.
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