Deutsche Bourse and Swissccom have completed a successful proof of concept for settling securities transactions using distributed ledger technology and the exchange of equity and cash tokens.
Working with Falcon Private Bank, Vontobel and Zürcher Kantonalbank, the German exchange group and Swisscom say the PoC lays the foundation for a leap in efficiency in the settlement of legally binding securities transactions in shares of small and medium-sized enterprises.
For the trial, the share registry of a real Swiss enterprise was digitalised using the platform of the start-up company daura, and the shares were then tokenised. To enable the execution of a delivery-versus-payment transaction based on DLT, money was made available in the form of cash tokens. Deutsche Börse provided the 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. In the following securities transactions, the banks acted as counterparties and exchanged securities tokens against cash tokens using both the Cord and Hyperledger DLT protocols.
The custody and management of the digital assets was provided by Swisscom and Sygnum joint venture Custodigit
Jens Hachmeister, head of new markets, Deutsche Börse Group, comments: “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."
A productive service offering remains subject to the approval of respective regulatory and oversight authorities, he adds, as well as compliance with applicable directives.