Blockchain Platform For Securities Lending Planned By Deutsche Börse, HQLAx

Announcements, Blockchain, Innovation | March 26, 2018 By:

Frankfurt-based exchange group Deutsche Börse has teamed with liquidity management company HQLAx to develop a securities lending solution using R3’s Corda blockchain platform.

Deutsche Börse is a marketplace organizer for the trading of shares and other securities. It is also a transaction services provider. It gives companies and investors access to global capital markets. Deutsche Börse has locations in Germany, Luxembourg, Switzerland, Czech Republic, and Spain, as well as representative offices in Beijing, London, Paris, Chicago, New York, Hong Kong, and Dubai.

HQLAx provides market participants with a platform that helps improve collateral fluidity by creating a new, efficient, transparent, and more cost-effective marketplace for liquidity transfers. It improves collateral fluidity with an operating model that does not require securities to be moved across central securities depositories (CSD).

Under the partnership, the companies will use the Corda platform to build a fully integrated front-to-back operating model to facilitate more efficient collateral management of high-quality liquid assets. According to the most recent Basel III Monitoring Report1, the global banking industry reported holdings of €11.95 trillion ($14.8 trillion USD) of high quality liquid assets.

Deutsche Börse’s Eurex Repo platform will deliver the trading layer exclusively and will also assume a lead role in a custody-agnostic, post-trade processing layer,  which is designed to interoperate with multiple collateral agents and custodians. HQLAx will help market participants redistribute collateral liquidity more efficiently by improving interoperability for pools of securities residing in multiple, disparate settlement systems and locations.

HQLAx’s CEO Guido Stroemer said the partnership enables them to maximize the network effect that will drive widespread adoption of the HQLAX platform. He said the goal is to mobilize liquidity across pools of collateral currently residing in disparate custody accounts around the globe.

Deutsche Börse Executive Manager Philippe Seyll said the two companies will address some of the major issues in today’s securities lending markets through innovate means.

“Wth the creation of a neutral custody agnostic control layer, Deutsche Börse is embracing distributed ledger technology and complements it with a neutral and trusted market infrastructure role open to multiple custodians and collateral agents,” said Seyll. “This way Deutsche Börse supports market participants to deal with the global regulatory framework whilst reaping the benefits of the leading edge distributed ledger technology.”

Earlier this month, Zurich-based financial services company Credit Suisse and Amsterdam-based ING Group were the first to execute a live collateral swap with full legal exchange of contracts and settlement using an R3 Corda-based collateral lending application developed by HQLAx.