Euroclear to Launch DLT-based Bond Settlement Platform This Year
Euroclear conducted a recent trial with the French central bank for using blockchain technology for bond transactions using CBDC as a payment.
Euroclear, a Brussels-based firm specializing in traditional finance securities trading, is reportedly working on the launch of a new platform for trading securities based on distributed ledger technology (DLT). A staffer from the firm stated that the launch of the platform could happen as soon as this year.
This initiative comes after Euroclear conducted a recent trial with the French central bank for using blockchain technology for bond transactions. The two players also used a central bank digital currency as a payment. Thus, they decided to extend this idea beyond a mere experiment and also cover the live transfers of security tokens.
Speaking at an event in Brussels on Thursday, March 30, Bart Garré, a lawyer for Euroclear, said:
“Euroclear is building and is finalizing the first minimum viable product of a DLT platform for issuance and settlement of digital bonds”.
He further added that Euroclear doesn’t have a definite timeline for the launch of the digital bond settlement platform. However, it could happen as soon as this year. Garré said that in order to ensure liquidity, the trading platform will link to legacy bond markets.
Garré also clarified that the project doesn’t necessarily depend on the recent changes introduced by the Europen Union’s DLT pilot regime which seeks to make it easier to trade stocks and bonds using cryptocurrencies’ underlying blockchain technology. He also added that Euroclear has some legal assumptions ahead of it. Garré said:
“How do you transfer ownership? Do you need to change the law to be able to do that?” Garré asked. He also added to take collateral “can be done with a very minor change in the financial collateral law.”
Euroclear and Blockchain
This is not the first time that the Brussels-based financial player is dabbling with blockchain technology. In the past, Eruoclear has worked along with other partners in the market for launching its own blockchain-based solutions.
Back in 2019, Euroclear partnered with EIB and Banco Santander for making blockchain-based ECP settlements. Besides, the financial firm has also used blockchain technology for making gold settlements.
As the market matures, financial services companies are leveraging the power of blockchain technology for the settlement of bonds and securities. Last month, German tech giant Siemens issued its digital bond on blockchain technology. Similarly, EIB also launched its first blockchain-based Sterling bond product last month.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
