Commerzbank, Credit Suisse and UBS carried out the first transactions on Deutsche Boerse and HQLAX’s distributed ledger technology-enabled (DLT) security lending platform.
According to a Deutsche Boerse press release on Dec. 3, the company jointly developed the platform with fintech firm HQLAX, which was launched by R3 and uses Corda DLT technology to provide liquidity and collateral management products.
The platform was able to swap ownership of a basket of German government bonds and a basket of corporate bonds between UBS and Commerzbank while employing Clearstream Banking as a custodian.
It also conducted a cross-custodian swap between UBS and Credit Suisse, which exchanged the ownership of a basket of corporate bonds at Clearstream Banking and a basket of German government bonds at Euroclear Bank.
Per the report, this approach did not require the physical movement of securities between the collateral agents since the change in ownership was recorded on HQLAX’s registry built on Corda Enterprise. Head of new markets at Deutsche Boerse Jens Hachmeister commented:
“The go-live of the HQLAX operating model demonstrates the power of innovation that DLT is already bringing to the financial services industry. […] It proves how new technology can successfully be combined with trusted market infrastructure – and the positive reception of the model in the market speaks for itself.”
A broad collaboration
Per the release, Commerzbank, Credit Suisse and UBS have been working with the HQLAX since the initiative started. Furthermore, the project involves over 15 market participants including CIBC, Citi, Goldman Sachs and ING. JPMorgan is in the process of becoming the third tri-party agent in the HQLAX operating model, alongside Clearstream Banking and Euroclear Bank.
As CryptoNewspeople reported in late October, Deutsche Boerse and Commerzbank have previously collaborated on a joint pilot transaction settlement of post-trade securities using digital tokens and DLT.