Deutsche Börse rolls out major technology overhaul with launch of digital post-trade platform

Fully digital post-trade platform set to bring same-day-issuance and paperless, automated straight-through processing for the entire value chain of issuance, custody, settlement, and asset servicing for digital securities.

Deutsche Börse has unveiled its plans to launch a fully digital post-trade platform enabling end-to-end digital securities processing. 

Cloud-backed and DLT-ready, the new D7 platform will enable the digitisation of financial products with continuing access to both existing central and distributed infrastructures and markets.  

Deutsche Börse said the move will pave the way for same-day-issuance and paperless, automated straight-through processing for the entire value chain of issuance, custody, settlement, payment and asset servicing for digital securities. 

The German exchange group will be working with distributed ledger technology (DLT) specialist, Digital Asset, as a partner on the project. 

Specifically, the two will be building a central registry system for Clearstream – Deutsche Börse’s international central securities depository (ICSD) – based on a centralised database which will form the basis for the issuance and custody of dematerialised securities in compliance with new legislation introduced earlier this year in Germany. 

The launch of the digital central register is planned for November 2021 and will be linked through T2S – the existing pan-European settlement system. 

In a subsequent rollout in mid-2022, D7 will also support same-day-issuance and paperless, automated straight-through processing for certificates and warrants issued at Clearstream.

Deutsche Börse said this step reduces friction, the need for reconciliation, as well as, administrative efforts and costs significantly. 

The final step of the rollout – only a vague 2022-2024 timeline was given for this aspect – will see D7 support decentralised and delivery-versus-payment settlement and custody systems. This will include connection to existing specialised DLT offerings, such as collateral mobility platform, HQLAx, for collateral basket lending service and FundsDLT for funds administration and distribution. 

Regarding cryptocurrencies, Deutsche Börse has said that at the outset, D7 services will focus on electronic securities – based on the recently launched new German legislation on electronic securities (eWpG)), though believes this could be extended, saying it is “foreseen and will be further specified in due course”. 

“With D7, we’re providing the financial community with a next generation digital securities post-trade platform to unlock the potential of truly digital and decentralised finance,” said Stephan Leithner, member of the executive board of Deutsche Börse, responsible for pre- and  post-trading.  

“It’s time not only to digitise single processes; it’s time to reinvent post-trading altogether for a stronger, more sustainable and digital future of securities markets.” 

Regarding its partnership Digital Asset said Deutsche Börse will leverage Digital Asset Modelling Language (DAML) smart contracts from Digital Asset to create and process digital instruments – the digital description of electronic securities – to manage the securities alongside the entire value chain. 

“The global securities market is ripe for innovation,” said Yuval Rooz, co-founder and chief executive officer at Digital Asset. “Our shared vision with Deutsche Börse in realising a digital future for capital markets will not only enable interoperability between financial institutions, but bring greater levels of efficiency, security and transparency to the German and broader global financial markets.”