Credit Suisse Group AG and ING Groep NV announced today that they completed a securities lending transaction worth 25 million euros ($30.48 million) using a blockchain-based platform designed for this purpose from HQLAx. For the underlying protocol, financial technology company HQLAx selected Corda, a distributed ledger blockchain platform developed by innovation firm R3CEV LLC. HQLAx chose to build on Corda in 2017 because it represented a novel way to exchange financial assets and showed the promise to improve efficiency while reducing risk. Using the Corda blockchain, Credit Suisse and ING agreed to transfer legal ownership of Dutch and German government securities using HQLAx Digital Collateral Records while the underlying securities remained static in accounts held by their respective custodian. In a traditional securities lending transaction, individual underlying securities are transferred between accounts. With the blockchain, the record of legal ownership linked to the accounts is recorded on the distributed ledger in a manner that’s tamper-resistant and transparent to regulators. Since the securities accounts remain untouched and the legal status is linked to DCR, the amount of paperwork and people involved in the transfer can be greatly reduced. As a result, the chances of an error being made along the process also drops, reducing the risk that such a transaction can lead to legal trouble. “The success of this first live transaction speaks to the potential for blockchain technology to help improve collateral fluidity by creating a more efficient, transparent and cost-effective marketplace for liquidity transfers,” said Romain Dumas, head of rates repo and collateral optimization at Credit Suisse Securities Europe. The companies said that law firm Clifford Chance LLP was instrumental in the development of the legal framework for transferring ownership of securities via the blockchain platform. VIDEO The first securities transfer over a blockchain platform happened in 2015 when Chain Inc. completed a private transaction on the Nasdaq stock exchange. That transaction used the Nasdaq Linq Blockchain platform to reduce settlement time significantly and eliminate the need for paper stock certificates. Since then, a multitude of financial technology industry and market companies have explored blockchain platforms. For example, in 2017 the London Stock Exchange plc partnered with IBM Corp. to allow small and medium European companies to digitize their corporate securities. Later that year, the Australian stock exchange Australian Securities Exchange Ltd. announced that it would start using a blockchain platform developed by Digital Asset Holdings LLC to begin tracking securities trades. “Collateral lending is a great example of a process that can be revolutionized by blockchain technology,” said David E. Rutter, chief executive of R3. Rutter said the transaction represented “a significant milestone for the market,” and that it was a big step toward bringing the HQLAx and R3 Corda platform into production. No details have been released on when the full, live production version of will be implemented, but further information is available on the HQLAx website of the entire process and platform. Show your support for our mission with our one-click subscription to our YouTube channel (below). The more subscribers we have, the more YouTube will suggest relevant enterprise and emerging technology content to you. Thanks! Support our mission: >>>>>> SUBSCRIBE NOW >>>>>> to our YouTube channel. … We’d also like to tell you about our mission and how you can help us fulfill it. SiliconANGLE Media Inc.’s business model is based on the intrinsic value of the content, not advertising. Unlike many online publications, we don’t have a paywall or run banner advertising, because we want to keep our journalism open, without influence or the need to chase traffic.The journalism, reporting and commentary on SiliconANGLE — along with live, unscripted video from our Silicon Valley studio and globe-trotting video teams at theCUBE — take a lot of hard work, time and money. Keeping the quality high requires the support of sponsors who are aligned with our vision of ad-free journalism content. If you like the reporting, video interviews and other ad-free content here, please take a moment to check out a sample of the video content supported by our sponsors, tweet your support, and keep coming back to SiliconANGLE.
Credit Suisse Group and ING Group have completed a live securities lending transaction using blockchain technology. Fintech firm HQLAx used R3CEV's Corda blockchain platform, which saw ownership of Dutch and German government securities transferred without the need to move the underlying securities. The technology could significantly increase efficiency, and R3 CEO David E Rutter said the transaction was a "a significant milestone for the market" but gave no details as to when the HQLAx/Corda platform may go into production.