Deutsche Börse and Commerzbank recently conducted a joint pilot transaction deal of after trade securities utilizing distributed ledger technology (DLT) and digital tokens. An official announcement was made on 23 October by Deutsche Börse stating the involvement of MEAG, the asset manager of ERGO, a reputed insurance company from Germany.
DLT Milestone Unlocked
Deutsche Börse and Commerzbank were jointly responsible for developing and handling the technology and the legal proceedings. To mark the first step of their collaboration, Deutsche Börse and Commerzbank had already finished up a repo transaction sometime earlier this year. Digital tokens used in the transaction were provided with the help of traditional bank capital and securities, securities tokens and cash tokens. The settlement conducted transactions through a delivery vs payment system along with the transfer of cash through tokens.
Commerzbank also made use of tokenized cash as a form of collateral at Eurex Clearing, a global exchange firm owned by Deutsche Börse. Eurex Clearing amidst all this played its part as the main counterparts and cash tokenizer. MEAG played its predominant part of securities buyer and Commerzbank as its main seller and curator of the security token.
Blockchain Technology: a Guiding Force
Statements released by Deutsche Börse cited blockchain technology as the development force behind the instant exchange of tokens. Due to this, participants of the transactional exchange have achieved yet another milestone in highlighting the benefits of DLT in post-trade services. The idea of pilot transaction although has yet to be approved by the regulatory authorities.
Frank Wellhofer, MEAG member of its board of management stated that the after trade blockchain-enabled pilot venture has brought forth several advantages including the reduction of third party applications and an increase in the securities transaction process.