Dutch bank ING has invested in the securities lending platform HQLAX.
HQLAX originally started as an incubator project at R3 and the initial prototype was done as an R3 Lab with five banks. One of the banks was ING and their team developed much of the prototype’s code.
Following on from that was a live pilot in 2018 with ING and Credit Suisse. In November 2019, the startup launched its collateral management solution built together with the Deutsche Börse, which to date, was the startup’s principal outside investor. The first postproduction transactions in November 2019 were between Credit Suisse, UBS and Commerzbank.
The platform enables banks to swap High-Quality Liquid Assets (HQLA) such as government securities, bonds, and equities. Today banks around the world hold USD 13 trillion in HQLA. The collateral is held in custody, and when there’s a swap to upgrade or downgrade a portfolio, usually the custodians or collateral agents must legally transfer ownership and move the assets. Instead, with HQLAX there’s a digital collateral record (DCR), and the transfer happens on-chain, thereby enabling intraday swaps.
It’s made possible by a Trusted Third Party owned by the Deutsche Börse that sits between the custodians (tri-party agent) and HQLAX. Therefore, the collateral stays with the original agent.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now
We welcome comments that add value to the discussion. We attempt to block comments that use offensive language or appear to be spam, and our editors frequently review the comments to ensure they are appropriate. If you see a comment that you believe is inappropriate to the discussion, you can bring it to our attention by using the report abuse links. As the comments are written and submitted by visitors of the The Paypers website, they in no way represent the opinion of The Paypers.