Commerzbank and Deutsche Börse use DLT for repo transaction
07 March 2019 Frankfurt
Image: Shutterstock
Commerzbank and Deutsche Börse have used distributed ledger technology (DLT) to execute a legally binding settlement of a repo transaction for the first time.
The prototype transaction, based on delivery versus payment, was executed as part of a joint proof of concept examining the possible use of blockchain technology in securities settlement.
For the transaction, digital tokens were generated for both commercial bank money (cash tokens) and securities (securities tokens).
DLT was then used to execute the simultaneous swap of the tokens as a legally binding transaction.
Deutsche Börse acted as the cash provider, Commerzbank as the borrower while Commerzbank’s research and development unit acted as the blockchain platform operator.
The technology used and the underlying legal concept was developed jointly by the partners.
According to Commerzbank, the transaction shows that a legally-binding, efficient and transparent movement of tokenised securities and cash on blockchain based on a delivery versus payment principle is feasible.
Michael Spitz, CEO of the research and development unit of the Commerzbank Group, said: “Through the systematic development of blockchain technology, DLT is increasingly gaining in importance for a growing market.”
He added: “We are delighted to support the transaction as a platform operator and, together with Deutsche Börse, to have reached such an important milestone in the adaptation of this future technology for the capital market.”
The prototype transaction, based on delivery versus payment, was executed as part of a joint proof of concept examining the possible use of blockchain technology in securities settlement.
For the transaction, digital tokens were generated for both commercial bank money (cash tokens) and securities (securities tokens).
DLT was then used to execute the simultaneous swap of the tokens as a legally binding transaction.
Deutsche Börse acted as the cash provider, Commerzbank as the borrower while Commerzbank’s research and development unit acted as the blockchain platform operator.
The technology used and the underlying legal concept was developed jointly by the partners.
According to Commerzbank, the transaction shows that a legally-binding, efficient and transparent movement of tokenised securities and cash on blockchain based on a delivery versus payment principle is feasible.
Michael Spitz, CEO of the research and development unit of the Commerzbank Group, said: “Through the systematic development of blockchain technology, DLT is increasingly gaining in importance for a growing market.”
He added: “We are delighted to support the transaction as a platform operator and, together with Deutsche Börse, to have reached such an important milestone in the adaptation of this future technology for the capital market.”
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