HQLAX and Fnality deliver cross-blockchain repo swap pilot
05 December 2022 London, Luxembourg
Image: stock.adobe.com/phive2015
HQLAX and Fnality have completed a DvP repo settlement proof of concept using Fnality鈥檚 distributed ledger-based payments system and the HQLAX digital collateral registry.
The DvP trade was completed atomically, dictating that the tokenised collateral transfer was conducted wholly on the HQLAX DLT, built on R3 Corda, and funds transfer was handled using the Fnality Payment System (FnPS) built on Enterprise Ethereum. No collateral transfer was represented on FnPS and no funds transfer was represented in HQLAX.
The participants note that this PoC confirms how platforms operating on different DLTs can be connected to process such a transaction, thereby reducing liquidity fragmentation, lowering risk and ensuring programme resilience.
They indicate that the success of this test means that Fnality, HQLAX and their mutual clients can now focus on the practical implementation of this use case, moving the industry closer to intraday settlement of securities finance trades using this DLT-based architecture.
The PoC was conducted with Banco Santander, Goldman Sachs and UBS as project participants and delivered by linking HQLAX with the Ecosystem TestNet environment, used to simulate FnPS, built in association with Adhara.
Having supported collateral transformation trades on a delivery-versus-delivery (DvD) basis via the HQLAX digital collateral register for a number of years, this partnership with Fnality extends delivery-versus-payment (DvP) capability for a repurchase agreement transaction, with the payments leg processed on FnPS simultaneously with the collateral transfer on HQLAX.
Goldman Sach鈥檚 head of EMEA digital assets Amar Amlani, says: 鈥淓fficient cross-chain settlement is going to be fundamental to the scalable development of TradFi on DLT while enabling firms to realise the full potential of this innovative technology. It is exciting to see the successful outcome of the work between HQLAX and Fnality and we look forward to developing this use-case further.鈥�
Rhomaios Ram, CEO of Fnality International, adds: 鈥淭his DvP PoC is a significant step for Fnality as we enable a single pool of liquidity for our participants. Coupled with PvP, participants can swap their funds from their home currency to execute a DvP settlement with other platforms and business applications.
鈥淟everaging the strengths of each platform and ensuring they operate seamlessly is what has been exciting to see. This combination can deliver exactly the type of operational efficiencies that have been promised by DLT. Importantly, HQLAX, Fnality and its participants are at the forefront of this innovation, applying DLT to transform traditional financial systems.鈥�
Guido Stroemer, CEO of HQLAX, says: 鈥淓nabling the seamless execution of DvP involving collateral on our platform demonstrates our commitment to extending the mobility and use of collateral for participants of HQLAX.鈥�
The DvP trade was completed atomically, dictating that the tokenised collateral transfer was conducted wholly on the HQLAX DLT, built on R3 Corda, and funds transfer was handled using the Fnality Payment System (FnPS) built on Enterprise Ethereum. No collateral transfer was represented on FnPS and no funds transfer was represented in HQLAX.
The participants note that this PoC confirms how platforms operating on different DLTs can be connected to process such a transaction, thereby reducing liquidity fragmentation, lowering risk and ensuring programme resilience.
They indicate that the success of this test means that Fnality, HQLAX and their mutual clients can now focus on the practical implementation of this use case, moving the industry closer to intraday settlement of securities finance trades using this DLT-based architecture.
The PoC was conducted with Banco Santander, Goldman Sachs and UBS as project participants and delivered by linking HQLAX with the Ecosystem TestNet environment, used to simulate FnPS, built in association with Adhara.
Having supported collateral transformation trades on a delivery-versus-delivery (DvD) basis via the HQLAX digital collateral register for a number of years, this partnership with Fnality extends delivery-versus-payment (DvP) capability for a repurchase agreement transaction, with the payments leg processed on FnPS simultaneously with the collateral transfer on HQLAX.
Goldman Sach鈥檚 head of EMEA digital assets Amar Amlani, says: 鈥淓fficient cross-chain settlement is going to be fundamental to the scalable development of TradFi on DLT while enabling firms to realise the full potential of this innovative technology. It is exciting to see the successful outcome of the work between HQLAX and Fnality and we look forward to developing this use-case further.鈥�
Rhomaios Ram, CEO of Fnality International, adds: 鈥淭his DvP PoC is a significant step for Fnality as we enable a single pool of liquidity for our participants. Coupled with PvP, participants can swap their funds from their home currency to execute a DvP settlement with other platforms and business applications.
鈥淟everaging the strengths of each platform and ensuring they operate seamlessly is what has been exciting to see. This combination can deliver exactly the type of operational efficiencies that have been promised by DLT. Importantly, HQLAX, Fnality and its participants are at the forefront of this innovation, applying DLT to transform traditional financial systems.鈥�
Guido Stroemer, CEO of HQLAX, says: 鈥淓nabling the seamless execution of DvP involving collateral on our platform demonstrates our commitment to extending the mobility and use of collateral for participants of HQLAX.鈥�
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities 麻豆影视传媒 Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities 麻豆影视传媒 Times
