Capital markets News

LBBW, Vontobel issue first digital securities on Deutsche Börse D7 platform

clearstream deutsche boerse

Today Clearstream announced that LBBW and Vontobel have issued digital securities on the Deutsche Börse D7 platform. Clearstream is Deutsche Börse’s post-trade service provider, and D7 is its new digital post-trade platform.

In mid-2021, Germany passed its eWpG legislation supporting digitally native electronic securities. Under the law, securities registration can either be central or decentralized using blockchain. Today’s issuances are centrally registered securities, following the launch of D7 last year, which started by providing a digital central securities depositary. That’s because existing securities can be digitally represented.

The orchestration uses the DAML smart contract language, even though blockchain is not yet supported. Clearstream said that “digital instruments are smart objects that represent electronic securities”. They have all the necessary data for automation, enabling straight-through processing. In turn, this should minimize the need for reconciliations.

“This moves issuance of structured products from days to minutes,” said Jens Hachmeister, Head of Issuer Services & New Digital Markets at Clearstream. “We are accelerating time to market and unlocking an entire new universe of product opportunities as we continue to venture towards fully digitised markets.” 

Digital instruments are not specific to particular technologies or asset classes. In these examples, LBBW issued a bonus certificate and Vontobel a structured security.

“In addition to a highly automated trading process, a digitalised and efficient issuance and settlement process is of great importance for the retail-certificate business,” said Jan Krüger, Head of Equity Markets at LBBW.

The next step for D7 is DeNet, which will support blockchain-based securities. So far, the Deutsche Borse is working with VMWare Blockchain and R3’s Corda enterprise blockchain but also anticipates public blockchains. The first blockchain supported digital securities are likely to be for networks in which Clearstream has invested. Those include HQLAᵡ, the digital collateral and securities platform, and tokenized fund network FundsDLT.

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