The Deutsche Boerse has recently bought a minority shareholding in the blockchain based firm HQLAx. This move follows the partnering of the two firms 6 months ago. The partnership was aimed at creating a blockchain based trading solution. They jointly utilized Corda technology from R3 Consortium to develop a securities lending network.
Deutsche Boerse Group is a German exchange operator that offers transactions services. As of 2015, the Germany exchange had a total equity amounting to $4.327 billion. Meanwhile, HQLAx is a collateral and liquidity management company. It offers liquidity-based solutions to large institutional investors.
Expanded partnership
Deutsche Boerse announced that it spent a single-digit euro million sum to purchase the minority stake. This newly expanded partnership aims to create a post-trading solution through the blockchain technology. DB’s manager for global securities lending, Philippe Seyll stated, “Our aim is to work together with like-minded partners such as HQLAx to create a standardized market for securities lending.”
Following the investment, two DB employees will sit on the board of HQLAx. Philippe Seyll being one of them. The other one is Jens Hachmeister who oversees the building of blockchain projects. HQLAx described this move as a big step forward.
R3 Consortium is a software company that builds open source blockchain systems specifically for enterprise. Via its partnership with HQLAx, Deutsche Boerse is properly utilizing the said technology.
HQLAx’s model
When settling securities lending transactions conventionally, primary securities are transferred across different accounts. The collateral lending app model from HQLAx is different. It transfers baskets of securities by transferring Digital Collateral Records’ ownership of primary securities. It aims at mobilizing liquidity over various collateral currently being held in different custody accounts globally.
The German firm revealed that some banks were currently signing up to utilize the service. Hence, DB is liaising with relevant regulatory authorities in making sure the technology is operational.
Philippe Seyll stated that partnering with like-minded companies like HQLAx, they would develop a consistent marketplace. Market participants would be in a position to redistribute collateral liquidity in a more efficient manner.
DB also revealed that it intends to buy an additional stake in HQLAx by the end of the year.
