Frankfurt
18 January 2017
Reporter: Stephanie Palmer
CSDs find new ally for blockchain collateral scheme
Four international central securities depositories (CSDs) are collaborating with Deutsche Boerse to build a blockchain-based prototype for cross-border collateral transfer.

The Canadian Depository for Securities Limited (CDS), Clearstream in Luxembourg, South Africa’s Strate, and Norway’s VPS are all members of the Liquidity Alliance, an international consortium of CSDs focused on collateral management.

They are partnering with Deutsche Boerse to create the LA Ledger solution, intended to provide faster and more efficient mobilisation of security collateral and to overcome some of the challenges of moving collateral across jurisdictions.

Under the US Dodd-Frank Act and the European Markets Infrastructure Regulation, there is demand for high-quality collateral, and limited access. Moving such collateral around is a regulatory requirement for mitigating risk in the financial system.

LA Ledger will use decentralised distributed ledger technology, allowing direct interaction between participants and thereby simplifying the collateral mobilisation process.

In theory, fragmented security positions will be more allocated more efficiently, covering participants’ financial obligations in different jurisdictions.

The solution will initially be implemented as a prototype, based on the Hyperledger Fabric blockchain. Validation from market participants and regulatory authorities is scheduled to begin in Q2 2017.

CEO of VPS John-Arne Haugerud commented: “LA Ledger is designed to simplify cross-border collateralisation away from using multiple complex and non-standardised links towards smooth movement across various jurisdictions.”

Glenn Goucher, president and chief clearing officer at CDS, added: “With this initiative, we pursue an innovative partnership approach that will allow us to jointly embark on distributed ledger technology with a use case that is highly relevant to the wider industry.”

Monica Singer, CEO of Strate, said: “We look forward to engaging with regulators and market participants to validate the proposed solution.”

She added: “We are convinced that integrating this new technology into a permissioned environment of neutral regulated entities is the right way forward.”

More technology news
The latest news from Asset Servicing Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Nasdaq to support Chilean CSD in post-trade tech
25 May 2017 | Santiago | Reporter: Stephanie Palmer
Based on the Nasdaq Financial Framework the solution will replace Depósito Central de Valores’s existing core system
Linedata bolsters TA solution
26 April 2017 | London | Reporter: Stephanie Palmer
Linedata has upgraded it Linedata solution for transfer agents, to help clients to cope with increasing regulatory reporting requirements
Esprow launches MiFID II compliance platform
26 April 2017 | New York | Reporter: Becky Butcher
Esprow has launched ETP GEMS, a global exchange and markets simulation platform that provides an on-demand testing environment to facilitate compliance with MiFID II
SWIFT tests distributed ledger technology for reconciliations
25 April 2017 | Brussels | Reporter: Drew Nicol
The results of the proof of concept will be presented at Sibos in Toronto in October
ENSO and RSRCHX pair up for MiFID II solution
25 April 2017 | New York | Reporter: Drew Nicol
The NEX Group's ENSO, a centralised treasury management solution for the buy side, is set to expand its broker vote tool to include research consumption for the second Markets in Financial Instruments Directive
Law firm sees rise in fintech patents
20 April 2017 | London | Reporter: Mark Dugdale
The number of financial technology patents filed through the international system administered by the World Intellectual Property Organization has increased 49 percent in five years
Nomura taps Indian fintech start-up talent
19 April 2017 | Mumbai | Reporter: Drew Nicol
Nomura is looking to engage with Indian fintech expertise for capital market solutions
More technology news