The transaction was carried out on R3’s Corda blockchain platform using HQLAx’s securities lending app. It was the first live securities lending transaction completed on R3’s blockchain platform, and one of the first cases of distributed ledged technology (DLT) being used live for a capital markets transaction.
The transaction involved legal ownership exchange of German and Dutch government securities. The technology on HQLAx’s app, Digital Collateral Records, has, according to the companies, the ability to reduce operation and systematic risks, increase regulatory transparency, and streamline the management of capital. All of this makes settlement possible in an instant—much faster than traditional means, which usually take days.
Emmanuel Aidoo, distributed ledger and blockchain strategy head at Credit Suisse, says that, “[t]he platform gives us an opportunity to make balance sheet and capital usage much more efficient and timely.” Charley Cooper, a R3 managing director, added that the transaction was “far more than a proof of concept in a fenced lab. These are regulated institutions in a real market and it is a unique demonstration that blockchain solutions are being deployed in commercial settings.”
Ivar Wiersma, ING Wholesale Banking innovation head, said that the transaction demonstrated progress regarding the benefits of DLT for ING’s clients and society “by making the financial industry more efficient and resilient”.
The companies anticipate that the application will go live by the end of the year, says Herve Francois, ING’s blockchain lead.
By Elliot Lyons, Research Analyst