Commerzbank, Deutsche Bourrse and Meag, the asset manager of Munich Re and Ergo have undertaken a delivery-versus-payment transaction entailing the use of securities and cash tokens for settlement and collateral calls.
For this transaction, digital tokens were generated using both commercial bank money and securities. The simultaneous swap of the tokens as final and binding settlement was enabled by using distributed ledger technology. As a further use case for cash tokens, Commerzbank provided the tokenized cash credits for coverage of margin requirements to central counterparty Eurex Clearing.
Eurex Clearing acted as tokenizer of cash, Meag as the buyer of securities and Commerzbank as the seller and the custodian of the securities tokens. Main incubator, Commerzbank’s research and development unit, provided the blockchain platform.
The latest effort, which has been shared with regulatory authorities in Germany, follows on from an earlier proof-of-concept between Deutsche Bourse and Commerzbank in the repo market.
Frank Wellhöfer, member of the board of management at Meag, says: "The involvement of tokens representing securities and money will facilitate network efficiencies and build a foundation for the creation of standards. This is important for the buy side as standards lead to broader market acceptance and thus create liquidity on DLT platforms in general.”