Deutsche Börses's Collateralised Coin Project for shifting collateral among banks using tokenised digital coins has been given the go-ahead for a full-scale pilot by Eurex Clearing.
The concept is based on a collateralised coin, “CollCo”. All peer-to-peer payments based on tokenised commercial bank money are accompanied by movements of collateral between the respective Eurex Clearing members using the CCP's functionality and rules.
The Börse has built a prototype and has been waiting on the results of an internal feasibility study by the clearing house.
The study examined risk management, process implementation and legal questions, says Stefan Teis, SVP, group business & product development, Deutsche Börse. "The study concludes that the project should be carried forward," he says.
Other blockchain-based initiatives under the Börse's aegis are also bearing fruit.
The exchange operator has been working with Deutsche Bundesbank on a project for the settlement of digital bonds against digital cash.
"We completed the first phase at the end of 2016 and are now in the second phase, with the prototype put to a performance test," says Teis. "This serves to verify whether blockchain technology is mature enough to process the standard market volumes, which are high. We expect the first results in the second quarter of 2018."
The Börse has also been collaborating with a coalition of four central securities on an initiative to use blockchain technology to ease cross-border mobilisation of security collateral under the banner LA Ledger.
Says Teis: We have already made a prototype available online for potential clients and partners to use for simulations. We are currently talking to clients and regulators and obtaining legal assessments."
The German exchange has additionally begun to tentatively explore the business opportunities afforded by cryptocurrencies, beginning with a coding competition in March to create new business applications for crypto assets.
"The cryptocurrency sector is very interesting to us," admits Teis. "Imagine cryptocurrency services along an entire value chain: ICO support on the primary market, secondary trading, indices and data offerings for cryptocurrencies, custody services for digital financial instruments or crypto assets. However, these ideas need to be closely analysed in light of the fact that regulation on this area is still lacking and entirely unclear, also considering the major uncertainties in the crypto market."