BME launches a new blockchain collateral pledge service
16 December 2019 Madrid
Image: Shutterstock
Spanish stock exchange BME has launched its first distributed ledger technology (DLT)-based service aimed at tackling inefficiencies in its collateral pledge infrastructure.
The platform promises to eliminate the need to exchange physical certificates in the collateral transfer process, thereby reducing the time for the constitution of a pledge from 24 hours to less than 10 minutes.
The service – known as DLT-Prenda – has been developed entirely by the exchange’s DLT-Lab and is built on Hyperledger Fabric technology as, according to BME, this allows for "advanced controls" over the participants accepted in the network, also known as a ‘permissioned blockchain’.
The project was undertaken alongside BME subsidiaries BME Clearing, the Spanish central counterparty, and, IBERCLEAR, the Spanish central securities depository, which participates by confirming to the DLT the reservation of securities at the CSD level.
Spanish asset manager Renta 4 Banco also contributed to the platform's development and is the first client register digital pledges on the platform.
BME confirmed it is “currently in conversations” with other entities and beneficiaries that have shown interest in the service.
Berta Ares, head of digital transformation at BME, tells SLT that the project aims to kick-start the digitisation of the certification of collateral pledge using blockchain technology, thereby eliminating the need to use and exchange physical certificates.
According to Ares, a user is able to reconcile their records with the ledger, which was not possible with paper certificates. In addition, the risk of certificates being lost or cancelled by the issuer without knowledge of the beneficiary is eliminated.
BME says it also allows enhanced privacy by the use of channels and is able to provide a blockchain solution where every entity can participate in the process which allows them access to their rightful data whilst protecting other entities.
Looking ahead, BME is planning to evolve DLT Prenda by extending to other beneficiaries and also to other types of products such as bank guarantees.
The platform promises to eliminate the need to exchange physical certificates in the collateral transfer process, thereby reducing the time for the constitution of a pledge from 24 hours to less than 10 minutes.
The service – known as DLT-Prenda – has been developed entirely by the exchange’s DLT-Lab and is built on Hyperledger Fabric technology as, according to BME, this allows for "advanced controls" over the participants accepted in the network, also known as a ‘permissioned blockchain’.
The project was undertaken alongside BME subsidiaries BME Clearing, the Spanish central counterparty, and, IBERCLEAR, the Spanish central securities depository, which participates by confirming to the DLT the reservation of securities at the CSD level.
Spanish asset manager Renta 4 Banco also contributed to the platform's development and is the first client register digital pledges on the platform.
BME confirmed it is “currently in conversations” with other entities and beneficiaries that have shown interest in the service.
Berta Ares, head of digital transformation at BME, tells SLT that the project aims to kick-start the digitisation of the certification of collateral pledge using blockchain technology, thereby eliminating the need to use and exchange physical certificates.
According to Ares, a user is able to reconcile their records with the ledger, which was not possible with paper certificates. In addition, the risk of certificates being lost or cancelled by the issuer without knowledge of the beneficiary is eliminated.
BME says it also allows enhanced privacy by the use of channels and is able to provide a blockchain solution where every entity can participate in the process which allows them access to their rightful data whilst protecting other entities.
Looking ahead, BME is planning to evolve DLT Prenda by extending to other beneficiaries and also to other types of products such as bank guarantees.
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