Distributed ledger technology (DLT)-powered securities finance platform provider HQLAx has closed a €14.4 million strategic investment round led by BNY Mellon, Goldman Sachs, BNP Paribas Securities Services and Citigroup, with additional participation from longtime strategic partner Deutsche Boerse.
The funding will be used to accelerate the core premise of the platform – helping the industry address European collateral fragmentation by extending its connectivity to triparty agents, custodians and market participants, says HQLAx.
BNP Paribas Securities Services, BNY Mellon, Citigroup and Goldman Sachs will connect to the HQLAx platform in 2021 with the aim of accelerating collateral mobility for their clients across the securities finance ecosystem.
BNY Mellon will connect as both a triparty agent and agent lender, Goldman Sachs as principal, BNP Paribas Securities Services as a triparty agent, and Citibank as a custodian.
HQLAx’s core clients are financial institutions active in securities lending and collateral management.
Guido Stroemer, chair and CEO of HQLAx, says: “Our company has come a long way from starting out as a concept in an R3 Laboratory to partnering with Deutsche Boerse and going into production with early adopters Commerzbank, Credit Suisse and UBS.
“Closing this strategic investment round with BNP Paribas Securities Services, BNY Mellon, Citigroup and Goldman Sachs is another major step towards market adoption.”
Stephan Leithner, member of the executive board of Deutsche Boerse and Clearstream chair, states: “Having worked with HQLAx for three years now, we are excited to see the network developing and such key industry players joining as shareholders and customers.
Leithner adds: “Building innovative and future-proof market infrastructures in a collaborative approach is an integral part of Deutsche Boerse’s and Clearstream’s growth strategy as they are key for flexible and efficient financial markets.”
Leveraging R3’s Corda Enterprise, the HQLAx platform aims to enable market participants to transfer ownership of securities seamlessly across disparate collateral pools at precise moments in time.
This allows participants to optimise their liquidity management and collateral management activities, thereby generating operational efficiency gains and capital cost savings, according to HQLAx.
Mathew McDermott, global head of digital assets at Goldman Sachs, predicts the platform will bring “meaningful efficiencies to the securities lending and collateral management markets".
“HQLAx’s innovative use of DLT is a prime example of the important role transformational technologies can play in reshaping the financial system, and we are pleased to be investing in and partnering with the company,” he states.
Puneet Singhvi, head of financial market infrastructures and lead for blockchain and digital assets at Citi Markets and Securities Services, also describes HQLAx’s offering as “innovative”, adding that will “drive operational cost saving by use of DLT combined with the advantage of managing collateral pools across Citi’s global footprint”.
Brian Ruane, CEO of clearance and collateral management and credit services at BNY Mellon, states that the direct connectivity between the bank and the DLT platform “combined with our trusted infrastructure” will enable “better liquidity management and collateral efficiency for our clients”.
Elsewhere, Hélène Virello, global head of investment and collateral services for BNP Paribas Securities Services, says her firm is backing HQLAx because of a shared vision of “bringing increased agility to today’s bespoke collateral environment”.
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