The distributed ledger for
Securities Finance and Repo

Reduction in intraday liquidity requirements

Scalable for future digitised assets

Reduction in fails

Regulatory transparency and risk compression post-default

Reduction in intraday credit exposures

Inter-operability across custodians

Transfer of ownership/pledge at precise times during the day

HQLAᵡ is an innovative financial technology firm founded by financial market practitioners. Our vision is to be the distributed ledger for Securities Finance and Repo.

Our immediate goal is to provide capital savings to global banks by improving collateral mobility across market-leading triparty agents and custodians in Europe. 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.

Use-Cases

LCR Management

Collateral upgrade transactions, evergreen / extendible maturities

Intraday Liquidity Management

Transfer of ownership of baskets of securities intraday DvD

Margin Pledge

Pledge baskets of securities real-time

Funding

Mobilise hard-to-move assets

Benefits

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

Reduction in fails

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.

Today

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.

Tomorrow

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.

Latest news

Sec Lending and Repo DLT Solutions Set to Take Off in 2023

January 18, 2023

Despite a lot of buzz around distributed ledger technology (DLT), there has not been widespread adoption in the post-trade space to date, as firms focused on experimentation and proof-of-concept projects. In a DerivSource podcast, Martin O’Connell, solutions architect at DLT vendor HQLAᵡ discusses the evolution of the technology and why 2023 is set to be a breakout year for DLT platforms in the securities lending and repo space.

Could HQLAᵡ‘s solution have helped ease market and operational disruptions during the recent UK Gilt volatility?

December 15, 2022

HQLAᵡ, a Distributed Ledger Technology (DLT) platform in collateral markets, offers a solution that digitizes collateral by ISIN. We set out to identify if HQLAᵡ’s Digital Collateral Records (DCRs) would have helped ease the operational or market burden of margin processing and Gilt volatility this past fall.

Fnality and HQLAᵡ demonstrate together with Banco Santander, Goldman Sachs and UBS, the first cross-chain repo swap pilot across Corda and Enterprise Ethereum

December 5, 2022

Fnality and HQLAᵡ demonstrate together with Banco Santander, Goldman Sachs and UBS, the first cross-chain repo swap pilot across Corda and Enterprise Ethereum, paving the way for the settlement of intraday transactions