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Eurex Clearing has launched the world's first distributed ledger technology-enabled collateral mobilisation service for central counterparties, marking a significant milestone in the digitisation of financial market infrastructure.
The Deutsche Börse Group subsidiary executed its inaugural transaction through J.P. Morgan, which mobilised securities collateral for Dutch pension fund investor PGGM using the new DLT-based system. The collateral was transferred from another custody location to Clearstream Banking S.A. for use as margin collateral at Eurex Clearing.
The service represents a collaboration between Eurex Clearing, technology provider HQLAX, and Clearstream. The underlying technology is provided by HQLAX, a provider of DLT solutions for collateral management, and allows clients to instantly access and utilise securities to fulfil margin requirements regardless of their physical location.
Built on HQLAX's digital ledger, the service provides instant access to security collateral assets via custodians and Central Securities Depositories. The collateral is then moved to Clearstream and deposited with Eurex Clearing as margin collateral, streamlining the entire process for market participants.
The initiative received regulatory non-objection from BaFin, Germany's financial regulator, and forms part of Eurex Clearing's broader digital transformation strategy. The clearing house positions itself as preparing proactively for the digital evolution of the financial industry.
Danny Hand, Prime Financial Services Product Development at J.P. Morgan
Danny Hand, Prime Financial Services Product Development at J.P. Morgan, commented: "J.P. Morgan's participation as the clearing member in the world's first live DLT-based collateral transaction for cleared derivatives initial margin demonstrates our commitment to innovation and our belief in the transformative power of DLT for collateral management across the industry. This solution has the potential to bring significant benefits to our clients, J.P. Morgan, and the market as it continues to evolve."
Anja Kleefsman, Head of Treasury & Liquidity Management at PGGM, added: "PGGM is delighted to be part of this first live DLT-based collateral mobilisation transaction initiated to meet our margin obligations at Eurex Clearing. Optimising our collateral management is a key priority and an element that plays an important role here is the ease of moving collateral. Instant access to and mobilisation of collateral assets provided by this DLT-based technology is a major step forward and we welcome this innovation. We're looking forward to the industry's further adoption of this solution and leveraging its benefits."
Eurex operates as the leading European derivatives exchange and, through Eurex Clearing, functions as one of the leading central counterparties globally. HQLAX is a financial technology firm that leverages distributed ledger technology to bring efficiencies to the securities finance and repo industry, serving banks and asset managers active in global securities finance and repo markets.
