Deutsche Boerse’s press release from December 3 is saying the company has developed the security lending platform in partnership with the HQLAX fintech, which got launched by R3 and works with Corda DLT to offer collateral management and liquidity products.
The Platform Swapped Ownership of Government and Corporate Bonds Baskets
The platform swapped an ownership basket of German governmental bonds and one of corporate bonds. It employed Clearstream Banking as custodian, the swap being between UBS and Commerzbank. Another cross-custodian UBS and Credit Suisse swap took place, swap that exchanged the ownership of corporate bonds basket at Clearstream Banking and one of the government bonds at the Euroclear Bank. As reported, the approach didn’t involve physically moving securities between collateral agents because the ownership exchange got recorded on Corda Enterprise’s HQLAX registry. This is what Jens Hachmeister, the head of Deutsche Boerse new markets had to say about it:
“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.”
Other 15 Market Participants to Operate with the HQLAX Model
As the press release says, UBS, Credit Suisse, and Commerzbank have been employing the HQLAC model ever since the project started. There are 15 other market participants like ING, Goldman Sachs, CIBC and Citi that will take action in the same direction. Clearstream Banking, JPMorgan and Euroclear Bank also want to operate with the HQLAX model as third tri-party agents. It’s not the first collaboration between Deutsche Boerse and Commerzbank, as the two have jointly piloted a transaction settlement that uses DLT and digital tokens for post-trading securities.