the Commerzbank and the German stock exchange carried out a legally-binding settlement of securities on the Distributed Ledger technology. The Repo transaction was carried out in the framework of a feasibility study (Proof of Concept), demonstrating the safety and transparency of delivery against payment on the basis of the Blockchain.
Polina Khubbeeva
11. March 2019BTC$3.853,29 -1.37%part Facebook Twitter LinkedIn xing mail
It is proof of the possibilities of the Blockchain in the case of legally binding securities transactions: In the course of a Proof-of-Concept (PoC) of the German stock exchange in cooperation with the Commerzbank, the partners made a successful Repo business by means of Distributed Ledger technology (DLT), such as the Deutsche Börse on 6. March was known.
combination of Cash tokens and Security tokens for the time the same exchange
In a Repo transaction, which is also called repurchase agreement, combined with a financial transaction is the simultaneous sale and subsequent repurchase of a security. These money-market instruments banks can use to secure short-term liquidity needs.
the basis of repo transactions was a bond of the KfW Bank group, about tens of millions of euros. The duration was seven days with a Negative rate of -0.5 percent. At the same time exchange the Token was not legally binding.
For the proto-typical transaction, the financial institutions generated digital Token in the Form of book money (Cash Token), as well as of securities (Security Token). The German stock market performed as a lender, and Commerzbank as cash taker. The research and development unit of Commerzbank, “main incubator”, served on a Law – and technology concept as a Blockchain platform operators. This concept was developed by the partners specifically for the feasibility study.
The possibilities of DLT for a Repo
According to the German stock exchange, the successful transaction to show the key benefits of the Blockchain for trading in securities on the Basis of delivery-versus-payment. As a figure in real time lowering the counterparty risk and reduce capital costs. Furthermore, the shortened Processing time could allow for a direct and transparent involvement of regulators and supervisors.
Jens Hachmeister, in charge of the DLT, Crypto Assets and New Market Structures and of the German exchange showed, however, satisfied:
The successful settlement in the framework of the joint project motivates us, the performance of the Distributed Ledger technology to explore. Our special focus of the integrated payment function of Cash on the Ledger – we have proven to be successful. Different Blockchain applications to advance and set new Standards for the Deutsche Börse group is a high priority, this process will be done in close collaboration with partners, Supervisory authorities and Central banks.
Next steps are linked under the dash close to the creation of the legal framework. Commerzbank and Deutsche Börse understood, moreover, as a pioneer of an innovative financial market infrastructure in the Blockchain.
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