A group of central securities depositories (CSDs) are working
with Deutsche Borse on a blockchain solution to ease
cross-border collateral transactions.
Clearstream, along with CSDs in South Africa, Norway and
Canada, have paired up with the operator of the Frankfurt Stock
Exchange in an attempt to improve the often time consuming and
costly process of shifting collateral across time zones and
The aim is to use distributed ledger technology, or blockchain,
to speed up cross-border collateral transfers and allow for a
more efficient allocation of fragmented security positions in
various countries globally.
Each CSD is a member of the Liquidity Alliance (LA) –
a platform for CSDs to collaborate on collateral management.
Meanwhile Deutsche Börse, Clearstream's parent company,
has been active with blockchain and was recent investor in
Digital Asset's $60m funding round.
The German group is currently awaiting approval to merge its
operations with the London Stock Exchange.
In a joint statement on Wednesday, the CSDs said a blockchain
prototype called LA Ledger that allows direct interaction
between participants is currently being tested.
Validation by regulatory authorities and market participants
will start in the second quarter of 2017.
Glenn Goucher, president and chief clearing officer of the
Canadian Depository for Securities, said: "With this
initiative, we pursue an innovative partnership approach that
will allow us to jointly embark on distributed ledger
technology with a use-case that is highly relevant to the wider
John-Arne Haugerud, chief executive of Norway’s
VPS added: "LA Ledger is designed to simplify cross-border
collateralisation away from using multiple complex and
non-standardised links towards smooth movement across various
The move comes as regulators increasingly require market
participants to provide collateral to mitigate risks in the
Dodd-Frank Act in the US and EMIR in the EU, for example, are
leading to a growing demand for high-quality collateral to
which access is limited.
Monica Singer, chief executive of South Africa’s
Strate, said she is "convinced" that integrating this new
technology into a permissioned environment of neutral regulated
entities is the "right way forward".