German language securities market place Deutsche Boerse and Commerzbank have completed a articulation airplane pilot transaction settlement of post-trade securities using digital tokens and distributed ledger engineering science (DLT).

Tokens generated from both commercial bank money and securities

While the transaction also involved major German language asset manager MEAG, which operates under Munich Re-endemic ERGO Group, one of the largest German insurance companies, Deutsche Boerse officially announced on October. 23. Meanwhile, the underlying engineering and the legal concept were jointly adult by Deutsche Boerse and Commerzbank, the firm noted.

The prototype settlement performed a delivery-versus-payment transaction and the transfer of tokenized cash. According to the announcement, digital tokens in the transaction were issued using both commercial bank money and securities, generating cash tokens and securities tokens.

New milestone in DLT use in post-trade services

Commerzbank further deployed tokenized cash every bit collateral at Deutsche Boerse-owned global exchange Eurex Clearing, which served as a primal counterparty and tokenizer of cash.

Meanwhile, MEAG acted as the heir-apparent of securities and Commerzbank as the seller and the custodian of the securities tokens, Deutsche Boerse noted.

According to Deutsche Boerse, achieving the simultaneous swap of tokens as a final and binding settlement was enabled past using blockchain technology. Every bit such, the transaction participants have reached another milestone in exploring the potential of distributed ledger technology in mail-merchandise services, the press release notes.

Regulators nevertheless to approve the type of transaction

The concept of the pilot transaction has been shared with regulatory authorities, while further implementation remains subject to their approval, Deutsche Boerse added.

Frank Wellhofer, a member of the MEAG'due south board of management, noted that the post-merchandise blockchain pilot unlocked a number of benefits such equally reducing the demand for third parties and speeding up the transaction procedure of securities. Wellhofer said:

"The involvement of tokens representing securities and money will facilitate network efficiencies and build a foundation for the creation of standards. This is of import for the buy side equally standards lead to broader market acceptance and thus create liquidity on DLT platforms in general."

In March 2019, Commerzbank and Deutsche Boerse completed a proof-of-concept for a legally binding repo transaction based on blockchain.