In March we wrote about a proof of concept developed by Spanish stock exchange group Bolsas y Mercados Españoles (BME) in which collateral pledges were digitized using blockchain. Just nine months later, the solution is now in production.
Previously collateral pledges involved issuing a physical certificate which invariably took 24 hours. Now issuing a digital collateral certificate on the blockchain takes ten minutes. And unwinding the pledge is just as fast.
BME is an umbrella group that includes all the Spanish stock markets as well as BME Clearing and Spanish central securities depositary IBERCLEAR. Both BME Clearing and IBERCLEAR participated in the project as well as the first external user Renta 4 Banco, which provides brokerage services.
Meanwhile, the Swiss SIX group and Euronext are currently in a bidding war to acquire the BME group for more than $3 billion.
BME Clearing acts as the central counterparty for most domestic trades. Hence, Renta 4 Banco customers will need to provide collateral pledges for their positions at BME Clearing.
The project called Be DLT-Prenda (Prenda is Spanish for pledge) was developed in house at the DLT-Lab and is based on Hyperledger Fabric. The roadmap includes extending the system to incorporate digital bank guarantees.
HQLAX is another blockchain solution that went live with BME’s German counterpart, the Deutsche Börse. HQLAX operates as a digital collateral registry.