Spanish stock exchange BME is testing the digitisation of the certification process of collateral pledges using blockchain technology, which it claims eliminates the need to exchange physical certificates.
The group worked with Renta 4 Banco on the proof of concept (PoC) and said it saw an 80% reduction in the total times of end-to-end processes.
BME said the system will bring about a “radical improvement in the participants’ operational and risk management as they will gain direct access to the information and participate in the validation of pledge agreements”.
The PoC is the latest in a series of blockchain initiatives around collateral management, efficiency and mobilisation.
In June 2018, Nasdaq, EuroCCP, Euroclear and ABN AMRO Clearing teamed up to address challenges around the provision of collateral to central counterparties (CCPs) using blockchain technology, completing a proof of concept around the use of securities to cover margin calls, with a shared network that can be built between collateral givers, collateral takers and intermediaries.
A year earlier, Citi and CME Clearing implemented a blockchain-based platform allowing banks to view their collateral in their ledgers in real-time and send cash or securities to clearing houses with one-click.
Meanwhile, HQLAx is set for launch this year, a securities lending platform using R3’s blockchain technology, that allows collateral to become tokenised and held by a custodian without physically moving.
“DLT technology allows us to reduce times drastically and improve the operation and control of the system, providing legal certainty for electronically generated certificates and maintaining privacy and compliance with the General Data Protection Regulation,” said Berta Ares, head of digital transformation, BME.