Central Securities Depositories’ Liquidity Alliance Tests Blockchain

CDS, Clearstream, Strate, VPS and Deutsche Börse develop blockchain solution for cross-border collateral transfer.

An international group of central securities depositories (CSDs), called the ‘Liquidity Alliance’ (LA), are cooperating with Deutsche Börse on developing blockchain technology to ease cross-border mobilisation of security collateral. These include the Canadian Depository for Securities Limited (CDS), Luxembourg-based Clearstream, South Africa’s Strate and the Norwegian VPS.

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The ‘LA Ledger’ prototype aims to enable a centralised, faster and more efficient allocation of fragmented security positions to cover financial obligations of market participants in multiple jurisdictions under the frameworks of Dodd-Frank in the US and EMIR in the EU. It will initially be implemented as a prototype based on the Hyperledger Fabric blockchain. The alliance expects that validation by regulatory authorities and market participants will start in the second quarter of 2017.

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“With this initiative, we pursue an innovative partnership approach that will allow us to jointly embark on distributed ledger technology with a use-case that is highly relevant to the wider industry”, said Glenn Goucher, President and Chief Clearing Officer, CDS.

“We look forward to engaging with regulators and market participants to validate the proposed solution”, added Monica Singer, CEO Strate. “We are convinced that integrating this new technology into a permissioned environment of neutral regulated entities is the right way forward.”

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