HQLAᵡ is an innovative financial technology firm founded by financial market practitioners. Our vision is to accelerate the financial ecosystem’s transition towards frictionless ownership transfers of assets, and our core clients are financial institutions active in securities lending and collateral management.
Our immediate goal is to improve collateral mobility amongst market-leading triparty agents and custodians. Together with Deutsche Börse, we created a multi-layer operating model which enables our clients to exchange ownership of baskets of securities across disparate collateral pools at precise moments in time.
The atomic nature of our Delivery vs Delivery (DvD) ownership transfers provides our clients with capital cost savings by reducing credit risk, intraday liquidity requirements, and operational risk.
Collateral upgrade transactions, evergreen / extendible maturities
Intraday Liquidity Management
Transfer of ownership of baskets of securities intraday DvD
Pledge baskets of securities real-time
Mobilise hard-to-move assets
Transfer of ownership/pledge at precise times during the day
Regulatory transparency and risk compression post-default
Reduction in intraday liquidity requirements
Reduction in intraday credit exposures
Scalable for future digitised assets
Inter-operability across custodians
HQLAᵡ enables market participants to transfer ownership of securities seamlessly across disparate collateral pools at precise moments in time. This allows our clients to optimize their liquidity management and collateral management activities, thereby generating operational efficiency gains and capital cost savings.
- The current collateral upgrade market relies on collateral to be managed across a fragmented custody network.
- Settlement of transactions occurs at unspecified times during settlement windows
- Current market practice is to settle collateral upgrade transactions either by:
• Two Free of Payment (FoP) deliveries, or
• Two Delivery versus Payment (DvP) settlements
- Both settlement practices consume costly bank capital. The former consumes intraday credit due to timing and mismatches of unsynchronised (FoP) deliveries, and the latter consumes intraday liquidity due to the cash payment legs of (DvP) settlements.
- HQLAᵡ uses new technology in an innovative way to enhance collateral mobility across the existing custodian/triparty landscape.
- The HQLAᵡ operating model leverages distributed ledger technology to enable atomic Delivery verses Delivery (DvD) for baskets of securities residing at multiple custodians.
- DvD reduces consumption of intraday credit and intraday liquidity, thereby providing capital savings.
- Not only a date but also a time is specified for the start leg and end leg of a transaction.
- HQLAᵡ could ultimately be used to enhance regulatory transparency over collateral chains, and potentially facilitate risk compression solutions for post default scenarios.
- Initial roll-out in Europe, longer term strategy is to expand to APAC and US.
World Economic Forum Insight Report
May 6, 2021
HQLAᵡ is proud to have contributed to the World Economic Forum study on the role that digital assets and DLT will play in shaping the future of capital markets. This is a comprehensive and informative study which highlights the significant potential that DLT has across many use cases in capital markets.
Securities Finance Times Technology Annual 2021
April 21, 2021
Guido Stroemer outlines in The Securities Finance Times Technology Annual 2021, how HQLAᵡ plans to expand its product scope and functionality, while further extending connectivity to triparty agents, custodians and market participants (p. 22).
Use of distributed ledger technology in post-trade processes
April 12, 2021
HQLAᵡ referenced in the recent ECB AMI-SeCo report on European stakeholders’ use of distributed ledger technology (DLT) in securities post-trade processes.