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 core clients are financial institutions active in securities lending and collateral management. Our shareholders include market- leading service providers in the global financial ecosystem.

HQLAᵡ and Deutsche Börse Group formed a strategic partnership for the creation of a joint operating model that provides market participants with improved collateral mobility across a fragmented securities settlement eco-system.

In the HQLAᵡ / Deutsche Börse Group operating model, there is no movement of securities between custodians. Instead, a digital collateral registry is used to record ownership of baskets of securities, whilst the underlying securities remain static in the custody location of the collateral giver. This enables platform participants to seamlessly execute capital efficient securities lending transactions for enhanced balance sheet optimization.

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.

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.