Eurex announced that the ESM’s €1 billion digital bond, which settled today, will be eligible for Eurex Repo as part of its general collateral (GC) pool and also eligible as margin collateral at Eurex Clearing. Eurex says this makes it the first traditional CCP to support a hybrid of conventional and digital securities.
The bond will join the ECB basket in Eurex Repo’s GC Pooling segment, which holds Eurosystem eligible securities, and likely other baskets where ESM paper already qualifies. Its eligibility follows from a Eurosystem decision last March to accept digital securities as collateral provided they are issued via a central securities depository. Clearstream acted as CSD for this issuance, using its D7 DLT infrastructure and settling in central bank money via Pontes.
“Instead of creating isolated digital islands that fragment liquidity and trap capital, Eurex Clearing is building a bridge between both ecosystems,” said Laura Bayley, CEO of Eurex Clearing. “Our clients can seamlessly trade, clear, and finance native digital assets through the clearing relationship they already have – backed by one set of rules, one risk model, and one deep liquidity pool.”
The ESM’s own diagram shows the bond as digital at issuance only. Clearstream creates the token on D7 DLT and settles the issuance against central bank money via Pontes. After that the bond lives in Cascade, Clearstream Banking Frankfurt’s conventional settlement system, where secondary trading, transfers and coupon payments happen in the usual way. That avoids the thin secondary markets some DLT issuances have suffered. For a CCP, that matters because collateral has to be taken and sold with no questions asked, and an illiquid instrument is unlikely to pass the eligibility gate. A Luxembourg Stock Exchange listing is also expected, which would further support secondary liquidity.
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