Category: Allgemein

Deutsche Börse Group and HQLAX partner to build securities lending solution on the R3 Corda blockchain platform

Release date: 26 Mar 2018

Deutsche Börse Group and HQLAX have signed a Letter of Intent to form a strategic partnership for the creation of an innovative securities lending solution using the R3 Corda blockchain platform.

Using Corda’s unique blockchain technology, the partners will build a fully integrated front to back operating model to facilitate more efficient collateral management of high quality liquid assets. These assets are in heightened demand due to the implementation of bank regulations for liquidity, mandatory clearing and margin requirements for OTC derivatives. According to the most recent Basel III Monitoring Report1, the global banking industry reported holdings of €11.95 trillion of high quality liquid assets.

The trading layer will be delivered exclusively by Deutsche Börse’s Eurex Repo platform, which will enable market participants to leverage existing connectivity to the market-leading Eurex Repo service. Deutsche Börse Group will in addition assume a lead role in the custody agnostic, post-trade processing layer, which is designed to interoperate with multiple collateral agents and custodians.

The partnership with Deutsche Börse is expected to foster market adoption by enabling seamless connectivity with HQLAX, for both trade execution and post-trade processing.

The securities lending market has long played an important role in high quality liquid assets portfolio management. However, incumbent operational bottlenecks across a fragmented global securities settlement system impede collateral fluidity, increase costs and risks, and result in sub-optimal financial resource management. In Europe alone, there exist over 40 central securities depositories (CSD).

Addressing these issues, HQLAX will help market participants redistribute collateral liquidity more efficiently, by improving interoperability for pools of securities residing in multiple, disparate settlement systems and locations.

In a traditional settlement of a securities lending transaction, underlying securities are transferred between custody accounts. In the HQLAX operating model, legal title transfer of baskets of securities will be achieved by the transfer of ownership of HQLAX Digital Collateral Records (DCRs) while the underlying securities remain static within unique DCR-linked custody accounts. The use of DCRs to effect transfers of securities will enhance regulatory transparency, mitigate systemic risk, reduce operational risk, and help financial institutions mobilise collateral and manage capital more efficiently.

The strategic partnership between Deutsche Börse Group and HQLAX brings the HQLAX collateral lending solution built on Corda, one step closer to production.

Guido Stroemer, CEO of HQLAX, commented: “Our goal is to mobilise liquidity across pools of collateral currently residing in disparate custody accounts around the globe. Partnering with Deutsche Börse Group enables us to maximise the network effect that will drive widespread adoption of the HQLAX platform. We look forward to further collaboration with the broader community of collateral agents and custodians.”

David Rutter, CEO of R3, added: “Partnering with a market leader like Deutsche Börse Group is a major milestone for HQLAX, and Corda is the perfect choice of platform. It was built from the ground up to enable businesses in complex and often highly regulated markets to overcome real-world challenges like this those associated with securities lending.”

Philippe Seyll, Executive Manager at Deutsche Börse Group, commented: “Jointly with our partners, we will address some of the major issues in today’s securities lending markets through innovate means. With the creation of a neutral custody agnostic control layer, Deutsche Börse is embracing distributed ledger technology and complements it with a neutral and trusted market infrastructure role open to multiple custodians and collateral agents. This way Deutsche Börse supports market participants to deal with the global regulatory framework whilst reaping the benefits of the leading edge distributed ledger technology.”

1  Basel III Monitoring Report (March 2018)

zusatzinformation

Deutsche Börse Group

Deutsche Börse Group is one of the largest exchange organisations worldwide. It organises markets characterised by integrity, transparency and safety for investors who invest capital and for companies that raise capital – markets on which professional traders buy and sell equities, derivatives and other financial instruments according to clear rules and under strict supervision. Deutsche Börse Group, with its services and systems, ensures the functioning of these markets and a level playing field for all participants – worldwide.

HQLAX

HQLAX is a financial technology innovation firm that specializes in delivering liquidity management and collateral management solutions for institutional clients in the global securities lending and repo markets. Learn more at www.hqla-x.com.

R3

R3 is an enterprise software firm working with a network of over 200 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop on Corda, its blockchain platform designed specifically for businesses.

R3’s global team of over 140 professionals in nine countries is supported by over 2,000 technology, financial, and legal experts drawn from its global member base. R3 is backed by investment of USD 107 million from over 40 firms

Corda is the outcome of over two years of intense research and development by R3 and its members and meets the highest standards of the banking industry, yet is applicable to any commercial scenario. It records, manages and executes institutions’ financial agreements in perfect synchrony with their peers, creating a world of frictionless commerce. Learn more at www.r3.com.

Tim Cook

Tim is a founding partner of HQLAᵡ after having spent 8 years covering Brokertec’s EU Repo product from a Sales and Product Development perspective.  He currently heads up EMEA Sales at LiquidityEdge, a new trading venue for US Treasuries.  Tim brings to the team an outstanding background in business development within the banking community.  He achieved FCA accreditation in 2007 and holds a BA Hons in Financial Services from Bournemouth University.

Olly Benkert

Olly is an Investment Banking veteran having spent over two decades at Goldman Sachs.
Initially hired into a graduate program, Olly spent 5 years in the Corporate Treasury in London before transferring to Hong Kong to become the Regional Treasurer for non-Japan Asia from 1999 to 2000. He transferred back to London to manage the Global Funding business including Money Market trading and continued to run that business profitably and through the financial crisis. Olly assumed responsibility for the Global Repo Business and International Short Term Interest Rate trading in 2010 working closely with clients, regulators, governments and other authorities to help shape the new trading and balance sheet landscape. Olly sat on the Bank of England Money Market Liaison Group, ECB’s Money Market Contact Group, ICMA’s European Repo Council, LCH Product Advisory Group and Euroclear’s collateral user Group. Since leaving Goldman Sachs he has been spending time with some exciting Financial Technology start-ups. Olly received a BA Hons from Southampton University.

Guido A. Stroemer

Guido is a financial market veteran with over 26 years of professional work experience in a variety of trading, risk management and senior leadership positions. In his most recent role as global head of repo trading at UBS, he managed a global team that was responsible for firm wide secured funding activities for fixed income securities. In this role, and in response to the changing regulatory landscape related to Basel III capital and liquidity requirements, Guido led an innovative organizational restructuring to integrate the repo business into a centralized treasury function to enhance proactive financial resource management for the bank. Over the course of his career, Guido has been an active participant in the ICMA European repo council and the SIFMA funding division executive committee. Guido received a BA from Hamilton College and MBA from NYU, Stern School of Business.