Deutsche Börse Group, a securities listing and trading exchange, which has its headquarters in Germany has announced plans to develop a blockchain-based system for securities lending.
According to the company’s announcement that was made on Monday, Deutsche Börse plans to develop a system, which can offer more efficient and reliable securities settlement. The system will use technical support from financial management firm HQLAX and will partner with blockchain startup R3’s Corda platform.
The exchange company explained that it has taken this step due to a fragmented world securities system that lead to higher operational costs, while lowering settlement fluidity.
The exchange said that these assets are in great demand, which is occasioned by the execution of bank regulations for liquidity, margin requirements for OTC derivatives and, mandatory clearing.
HQLAX CEO on the other hand commented and said their main goal is to increase liquidity in several collateral currently sitting in disparate custody accounts around the world.
This announcement is yet another major financial institution eyeing blockchain technology to so as to increase efficiency in existing business flow, while at the same time maintaining regulatory transparency.
In fact, R3 and HQLAX have already come up with a solution for securities lending in collaboration with banking giants including ING and Credit Suisse.
By using this solution, the banks completed a transaction of $30 million in securities over a platform powered by blockchain in early March, following a proof-of-concept conducted in 2017.
According to Philippe Seyll, the Executive Manager Deutsche Börse Group, the partnership between the German securities lending exchange and HQLAx could fix some of the major problems that prevail in the current securities trading markets through innovating means.
Early this month, ING together with Credit Suisse completed a live securities’ transaction through the HQLAx collateral trading platform that is based in Corda.
What does this project have to offer at the market?
Further, Mr. Seyll stated that with a neutral custody control layer’s creation, the company embraces distributed ledger tech and completes it with a trusted market infrastructure role that is open to many different additional agents and custodians. Therefore, Deutsche Börse helps the participants of the market to face the issues of the international regulatory framework while gaining the innovative distributed ledger technology’s benefits.