Frankfurt-based exchange group Deutsche Boerse will form a strategic partnership with blockchain technology designer R3 Corda for a new securities lending platform.
Deutsche Boerse and FinTech firm HQLAX will build a fully integrated front-to-back operating model, using Corda’s blockchain technology, to facilitate collateral management processes and the exchange of high quality liquid assets (HQLA).
Under the agreement, Eurex will provide the repo trading application, while Deutsche Boerse will offer a post-trade processing layer which will interoperate with multiple collateral agents and custodians.
“With the creation of a neutral custody agnostic control layer, Deutsche Boerse is embracing distributed ledger technology and complements it with a neutral and trusted market infrastructure role open to multiple custodians and collateral agents,” said Philippe Seyll, co-CEO, Clearstream Banking and executive manager, Deutsche Boerse group.
HQLAX, which already uses R3’s blockchain platform, has designed a service that uses digital collateral records (DCRs) to enable the legal transfer of baskets of securities between custody accounts without the physical movements of assets.
The partnership with Deutsche Boerse brings the HQLAX service one step closer to production.
“Our goal is to mobilise liquidity across pools of collateral currently residing in disparate custody accounts around the globe. Partnering with Deutsche Boerse group enables us to maximise the network effect that will drive widespread adoption of the HQLAX platform,” added Guido Stroemer, CEO of HQLAX.
Earlier this month HQLAX facilitated the first securities lending transaction between Credit Suisse and ING using R3 Corda’s blockchain platform.
The transaction involved the exchange of baskets of securities valued at €25 million using the HQLAX Corda-based collateral lending application.