Deutsche Börse, Swisscom and partners settle securities transactions via tokens and blockchain

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They say the proof of concept lays the foundation for “a leap in efficiency in post-trade services”.

The trial was carried out by Deutsche Börse and Swisscom with partners Falcon Private Bank, Vontobel and Zürcher Kantonalbank.

The settlement of securities transactions tested two distributed ledger technology (DLT) protocols — Corda and Hyperledger Fabric.

A specific process — cross chain secure settlement — was followed to ensure that none of the parties had to make advance payment during the settlement process.

SMEs' trading

The partners say the trial showed how legally binding security transactions in shares of small and medium-sized enterprises (SMEs) could work in the future, with immediate and secure settlement.
 
The project saw the share registry of a real Swiss enterprise digitalised using the platform from the start-up company daura, and the shares were then tokenised.

Then money was made available by Deutsche Börse in the form of cash tokens in Swiss Francs through its subsidiary, Eurex Clearing.

The money was deposited as collateral in the central bank account of Eurex Clearing at the Swiss National Bank.

Counterparties

The banks acted as counterparties and exchanged securities tokens against cash tokens using DLT to settle transactions.
 
Deutsche Börse and Swisscom jointly designed and developed the IT architecture with the systems hosted on Swisscom’s infrastructure.

Core elements were the digital share registry provided by daura and the application of Custodigit as a holistic solution for the custody and management of digital assets.
 
“It is of strategic importance for us to further develop the possibilities for settlement of securities transactions using DLT.

“This brings us one step closer to our goal of enabling the financial services industry in Germany and in Switzerland to efficiently use the potential of this new technology”, said Jens Hachmeister, Head of New Markets, Deutsche Börse Group.