Accelerating collateral mobility
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 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 tri-party 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, intra-day liquidity requirements, and operational risk.

Use-Cases

LCR Management
Collateral upgrade transactions, evergreen / extendible maturities
Intra-day 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

Why now?

Banks are facing increasing regulatory requirements for liquidity and capital, which are pressuring their earnings; there is a clear market need for a platform that can source and monetise liquidity efficiently, effectively, and transparently.

New Technology

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.

New Efficiencies

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.

Learn more

Timeline

Latest news

HQLAᵡ again recognised as one of the 50 European fintech companies to watch
September 16, 2020

HQLAᵡ again recognised as one of the 50 European fintech companies to watch

Integrating HQLAᵡ into the financial market infrastructure
June 16, 2020

Raoul Bhoedjang and Mario Schlipf explain how the HQLAᵡ platform uses DLT and discuss what is needed for frictionless integration into existing financial market infrastructure.

Client Onboarding: challenges, opportunities and lessons learned
May 29, 2020

HQLAᵡ Business Development and Client Onboarding team partners with our clients to provide a first-class customer experience throughout the platform onboarding process.

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