Germany’s Deutsche Börse Establishes A Dedicated Unit for Blockchain and Cryptocurrency
Deutsche Börse, a Germany-based capital markets giant, has established a new ‘DLT, Crypto Assets and New Market Structures’ dedicated department to explore the potential applications of blockchain technology.
The company is exploring different blockchain applications lie building a blockchain-based functional prototype for the settlement of securities with Deutsche Bundesbank. The exchange has also been working with several global securities depositories for using smart contracts to mobilize scarce collateral.
To further expand these services, Deutsche Börse has also extended its partnership with HQLAx, the collateral management firm which has developed a blockchain-powered operating model for securities lending. As a part of this partnership, two representatives - Philippe Seyll and Jens Hachmeister - from Deutsche Börse have been given board seats at HQLAx.
Jens Hachmeister, who currently presides the working on this dedicated department, said in an interview: "Deutsche Börse has been active with the technology in a first phase of ideation and exploration. We invested in various initiatives to create a sound understanding of the trends, the technology and its potential within the traditional segments of our value chain.”
"From Deutsche Börse’s point of view, the DLT/blockchain technology is a key opportunity for the creation of new market structures, adding new products onto our present structures and enhancing our existing offerings," he says. "Of course, the expectations are high and not all of them will be fulfilled - blockchain will not be the answer to all our questions. Yet the digital economy in general is heading for decentralization. In future, there will be more peer-to-peer governed marketplaces and less intermediaries. In that regard, blockchain has the potential to disrupt the capital markets infrastructure."
As a part of the partnership, Deutsche Börse and HQLAx will be together building a blockchain-based operating model for securities lending. Both the firms will execute this model using the blockchain technology developed by the R3 consortium.
The two firms are currently talking with regulatory authorities and have also started the on-boarding process while talking to multiple banks.
Phillip Seyll, co-CEO, Clearstream Banking, said: “This collaboration will enable us to create a true blockchain-based solution in the post-trade arena. Together with like-minded partners such as HQLAx, we want to create a standardized lending marketplace.”
Seyll also shed some light on how the collaboration between the two companies is important for the effective redistribution of collateral liquidity. He said: ’It will allow market participants to redistribute collateral liquidity more efficiently by improving interoperability for pools of securities residing in multiple, disparate settlement systems and locations.’’