As a major step forward for DLT in Capital Markets, Deutsche Börse and HQLAX have successfully launched their DLT solution for collateral swaps in the securities lending market. The first live transactions were executed by Commerzbank, Credit Suisse and UBS on the Eurex Repo F7-trading system.

A basket of German government bonds and a basket of corporate bonds were swapped between UBS and Commerzbank, using Clearstream Banking S.A. as custodian. This was followed by a cross-custodian swap between UBS and Credit Suisse, in which a basket of corporate bonds at Clearstream Banking S.A. and a basket of German government bonds at Euroclear Bank were exchanged without the need for securities to be physically moved between the collateral agents. Instead, the change in ownership was recorded on the digital collateral registry, which is one of the four layers of the HQLAX operating model.

“The go-live of the HQLAX operating model demonstrates the power of innovation that DLT is already bringing to the financial services industry,” said Jens Hachmeister, Head of New Markets at Deutsche Börse. “It proves how new technology can successfully be combined with trusted market infrastructure – and the positive reception of the model in the market speaks for itself.”

“HQLAX have come a very long way in a relatively short period of time,” said Guido Stroemer, CEO of HQLAX. “The launch of our production platform is the culmination of strong collaboration, not only with our strategic partner Deutsche Börse, but also with R3 and several global banks with which we began our journey less than three years ago in an R3 lab.”

In addition to Commerzbank, Credit Suisse and UBS, over 15 market participants, including CIBC, Citi, Goldman Sachs and ING, are currently onboarding to HQLAX. Meanwhile, J.P. Morgan is in the process of becoming the third tri-party agent, alongside Clearstream Banking S.A. and Euroclear Bank.