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Securities Settlement Solution from Deutsche Bundesbank and Deutsche Börse

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Deutsche Bundesbank and Deutsche Börse have jointly presented a functional prototype for the settlement of securities utilising blockchain technology. The prototype is designed to provide the technical functionality for the settlement of securities in delivery-versus-payment mode for centrally-issued digital coins, as well as the pure transfer of either digital coins or digital securities alone.

In addition, the prototype is capable of settling basic corporate actions such as coupon payments on securities and the redemption of maturing securities. The Deutsche Bundesbank and Deutsche Börse plan to develop the prototype further over the next few months, and this product will then be used to analyse the technical performance and the scalability of this kind of blockchain-based application.

Carl-Ludwig Thiele, Member of the Deutsche Bundesbank’s Executive Board, commented: “With the blockchain prototype, the Deutsche Bundesbank and Deutsche Börse want to work together to find out whether this technology can be used for financial transactions, and if so, how this can be achieved. The Deutsche Bundesbank hopes that this prototype will contribute to a better practical understanding of blockchain technology in order to assess its potential,”

The blockchain-based prototype is the first result of a collaborative research project between Deutsche Börse and the Deutsche Bundesbank. The prototype is purely a conceptual study and is far from being market-ready. The two institutions will continue to work on improving the prototype and drawing up a test concept.

CEO of Deutsche Börse AG, Carsten Kengeter remarked: “Along with the Deutsche Bundesbank we are innovatively and creatively addressing potentially radical technological opportunities for the financial sector. We will continue to do our utmost to leverage blockchain’s efficiency potential and to better understand and minimise the associated risks of this technology,”

The prototype offers blockchain-based payments and securities transfers as well as the settlement of securities transactions against both instant and delayed payment. Additional functionality includes maintenance of confidentiality/access rights in blockchain-based concepts on the basis of a flexible and adaptable rights framework, and identification of potential to simplify reconciliation processes and regulatory reporting. Features also enable the general observance of existing regulatory requirements and the implementation of a concept based on a blockchain from the Hyperledger project.

Matthew Warner
Based near Windsor, England, Matthew Warner is an enthusiast for innovative, cutting edge technologies. He is a B.Eng. graduate in engineering with honors from the University of Warwick and also holds an PGCE in education degree. Matthew is a member of Mensa.