Deutsche Bourse has set up a dedicated 'DLT, Crypto Assets and New Market Structures' unit to further advance its work into the transformational potential of blockchain technology.
Deutsche Bourse has been actively exploring potential applications of distributed ledgers and implications of crypto-assets, including co-operation with international central securities depositories on the use of distributed ledgers and smart contracts for mobilising scarce collateral, as well as the joint development of a functional prototype for the blockchain technology-based settlement of securities with Deutsche Bundesbank. Late last month, the Exchange also acquired a minority stake in HQLAx, the liquidity and collateral management outfit with which it is building a blockchain-based front-to-back operating model for securities lending.
Now, the German exchange has established a 24-person team led by Jens Hachmeister to co-ordinate its blockchain-based activities across the group.
"Deutsche Börse has been active with the technology in a first phase of ideation and exploration," says Hachmeister. "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.
However, these explorative steps have not been coordinated on a Group-wide level. In order to use the full potential of the technology for our businesses, to generate efficiencies and create revenues, a centrally steered approach is necessary to make a greater impact."
He says the technology cuts across core functions of the Bourse's value chain, naming pre-IPO/listing, trading and clearing, settlement and custody, and even the data and analytics business as prime examples.
"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 decentralisation. 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."