German banks execute real-time securities lending trade on blockchain
17 November 2021 Germany
Image: adobestock/ peshkov
Two German banks, DekaBank and Metzler Bank, have conducted a securities lending transaction on blockchain without prior collateralisation.
The trade was processed via DekaBank’s blockchain-based digital securities platform, the Secure Worldwide Interbank Asset Transfer platform or SWIAT, with technology support from Frankfurt-based software specialist Comyno.
The trading parties note that by lending via the SWIAT platform, the transaction will take place via a delivery-versus-delivery (DvD) transaction and established collateralisation requirements will no longer be necessary.
In a joint statement, the two banks indicate that transfers occur directly between custodian banks without moving securities between accounts at the CSD. This does not involve tokenisation and can eliminate the chains of custody that have traditionally supported securities lending activity.
For such securities transactions, trade and settlement now take place almost simultaneously, says Andreas Tanneberger, head of fixed income trading at Metzler Capital Markets.
Other industry partners are welcome to join this market initiative, released by Deka, which aims to establish itself as the industry standard for digital settlement. Participating partners will also have opportunities to offer their own services and products on the platform, and to develop the range of functions offered by the SWIAT platform.
“With potential for DvD trading, the lending market becomes more attractive for new and existing market players,” says Deka head of money, forex and repo/lending Michael Cyrus.
“This transaction represents another milestone in the development of a fully-digitised blockchain-based ecosystem for the financial markets,” says Cyrus.
DekaBank is the securities services arm of the German Savings Banks Finance Group (Sparkassen-Finanzgruppe).
B.Metzler seel. Sohn & Co. AG is the longest-established private bank in Germany, which has been in continuous family ownership for more than 345 years.
The trade was processed via DekaBank’s blockchain-based digital securities platform, the Secure Worldwide Interbank Asset Transfer platform or SWIAT, with technology support from Frankfurt-based software specialist Comyno.
The trading parties note that by lending via the SWIAT platform, the transaction will take place via a delivery-versus-delivery (DvD) transaction and established collateralisation requirements will no longer be necessary.
In a joint statement, the two banks indicate that transfers occur directly between custodian banks without moving securities between accounts at the CSD. This does not involve tokenisation and can eliminate the chains of custody that have traditionally supported securities lending activity.
For such securities transactions, trade and settlement now take place almost simultaneously, says Andreas Tanneberger, head of fixed income trading at Metzler Capital Markets.
Other industry partners are welcome to join this market initiative, released by Deka, which aims to establish itself as the industry standard for digital settlement. Participating partners will also have opportunities to offer their own services and products on the platform, and to develop the range of functions offered by the SWIAT platform.
“With potential for DvD trading, the lending market becomes more attractive for new and existing market players,” says Deka head of money, forex and repo/lending Michael Cyrus.
“This transaction represents another milestone in the development of a fully-digitised blockchain-based ecosystem for the financial markets,” says Cyrus.
DekaBank is the securities services arm of the German Savings Banks Finance Group (Sparkassen-Finanzgruppe).
B.Metzler seel. Sohn & Co. AG is the longest-established private bank in Germany, which has been in continuous family ownership for more than 345 years.
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