Deutsche Börse Group, the Germany-headquartered securities listing and trading exchange, is planning to develop a blockchain-based system for securities lending.
According to an announcement on Monday, Deutsche Börse said it plans to develop a system that can offer more efficient securities settlement, and will use technical support from financial management firm HQLAX and blockchain startup R3’s Corda platform.
The exchange explained that the move comes due to a fragmented global securities system that incurs higher operational costs, while lowering settlement fluidity.
“These assets are in heightened demand due to the implementation of bank regulations for liquidity, mandatory clearing and margin requirements for OTC derivatives,” the exchange said.
Guido Stroemer, CEO of HQLAX, commented:
“Our goal is to mobilize liquidity across pools of collateral currently residing in disparate custody accounts around the globe.”
The announcement also marks yet another major financial institution eyeing blockchain technology to streamline existing business flow, while maintaining regulatory transparency.
In fact, HQLAX and R3 have already developed a solution for securities lending in partnership with banking giants including Credit Suisse and ING.
Using the solution, the banks completed a transaction of $30 million-worth of securities over a blockchain-powered platform in early March, following a proof-of-concept conducted last year.