Deutsche Börse and HQLAx to Build Securities Lending Platform on Blockchain

Fully integrated front-to-back operating model will offer more efficient collateral management of high-quality liquid assets

In a bid to create a blockchain-based securities lending solution, Deutsche Börse Group entered into a strategic partnership with HQLAx, the marketplace organizer announced Monday.

According to the partnership agreement, the two organizations will use R3’s Corda blockchain platform to build a fully integrated front-to-back operating model to facilitate more efficient collateral management of high-quality liquid assets. Currently, the global banking industry holds €11.95 trillion of such assets, as per Basel III Monitoring Report.

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Deutsche Börse will be solely responsible to deliver the trading layer on its existing Eurex Repo platform, which will enable market participants to leverage existing connectivity to the market-leading Eurex Repo service Eurex Repo platform. In addition, it will assume a lead role in the custody agnostic, post-trade processing layer, which is designed to interoperate with multiple collateral agents and custodians.

Innovative solutions

Addressing this massive partnership, Philippe Seyll, Executive Manager at Deutsche Börse Group, commented: “jointly with our partners, we will address some of the major issues in today’s securities lending markets through innovate means.”

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“With the creation of a neutral custody agnostic control layer, Deutsche Börse is embracing distributed ledger technology and complements it with a neutral and trusted market infrastructure role open to multiple custodians and collateral agents,” he said. “This way Deutsche Börse supports market participants to deal with the global regulatory framework whilst reaping the benefits of the leading edge distributed ledger technology.”

Improved interoperability

The role of HQLAx will be to help market participants redistribute collateral liquidity more efficiently in a market with numerous incumbent operational bottlenecks across a fragmented global securities settlement system. The organization will try to achieve this by improving interoperability for pools of securities residing in multiple, disparate settlement systems and locations.

HQLAx’s CEO Guido Stroemer said: “our goal is to mobilize liquidity across pools of collateral currently residing in disparate custody accounts around the globe. Partnering with Deutsche Börse Group enables us to maximize the network effect that will drive widespread adoption of the HQLAx platform. We look forward to further collaboration with the broader community of collateral agents and custodians.”

“Partnering with a market leader like Deutsche Börse Group is a major milestone for HQLAx, and Corda is the perfect choice of platform. It was built from the ground up to enable businesses in complex and often highly regulated markets to overcome real-world challenges like this those associated with securities lending,” David Rutter, CEO of R3, said.

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