Oct 23, 2024

Date 23/10/2024 Tests reaffirm the importance of central counterparties (CCPs) in DLT-based environments. Together with the clearing community, trials were conducted to test cash settlement in cleared intraday repo transactions and intraday margin calls within production environments. Eurex Clearing participated in the Eurosystem’s exploratory work on new technologies for wholesale central bank money settlement. The initiative, led by the European Central Bank (ECB), aims to explore the potential of distributed ledger technology (DLT) in enhancing financial market infrastructures. On 22 and 23 October, a production trial with the DLT system of Banque de France was successfully completed on site at Deutsche Börse Group’s headquarters. Eurex Clearing successfully tested the settlement of cash over the ledger of Banque de France. These trials involved three other central banks: the German Bundesbank, Dutch De Nederlandsche Bank and Banque Centrale de Luxembourg. ABN Amro Bank, ABN Amro Clearing Bank, Rabobank, Clearstream, and Eurex Repo also participated in this cooperation. The tests focused on two primary use cases: centrally cleared repo transactions and intraday margin calls. The subject of the tests was a native digital commercial paper, issued on Clearstream’s D7 platform by ABN Amro and traded on the Eurex Repo F7 platform. This marks the first time that Eurex Clearing has managed its own wallet on a Eurosystem´s DLT technology. Reaffirming the essential role of CCPs in digital ecosystems The tests have demonstrated Eurex Clearing’s robust resilience in its clearing processes, effectively operating across both legacy systems and DLT-based environments. This adaptability ensures that existing clearing processes can seamlessly integrate with any technological framework. Additionally, the tests have provided critical insights into the implications of adopting new technologies. These tests clearly demonstrated that the counterparty credit risk remains unchanged regardless of the underlying technology. This finding highlights that the transition to DLT does not inherently alter the risk profile associated with counterparties. Eurex Clearing pioneers in digital solutions As a trusted financial market infrastructure, Eurex Clearing is actively preparing for the digital transformation of the financial industry, ensuring that its risk models and methodologies uphold market integrity and safety. The exploratory work will lay the basis for future industry standards, particularly for interoperability between DLT platforms and traditional finance, in which financial market infrastructures like CCPs will play a crucial role. This initiative highlights the importance of integrating new technologies to support the broader clearing ecosystem, maintaining stability and efficiency in financial markets. Claudine Hurman, Director of Infrastructures, Innovation and Financial Markets Directorate (DIIF), from Banque de France underlines: “Working with Deutsche Börse Group – Eurex Clearing, Eurex Repo, and Clearstream alike – on these trials has been invaluable in ensuring that the solutions meet the needs of all different stakeholders. These efforts are vital for integrating distributed ledger technology into financial market infrastructures, paving the way for the future of digital finance.” Jens Janka, COO and Member of the Executive Board of Eurex Clearing AG, concludes: “Eurex Clearing is proud to participate, together with Eurex Repo and Clearstream, in the ECB’s exploratory work on new technologies for wholesale central bank money settlement. These initiatives are crucial for advancing the integration of distributed ledger technology in financial market infrastructures. Our collaboration with the clearing community and central banks emphasizes our commitment to innovation and the future of digital finance.” Jens Hachmeister, Head of Issuer Services & New Digital Markets at Clearstream, adds: “We are thrilled to further shape the future of an inter-connected digital European settlement landscape together with the ECB and our Deutsche Börse Group colleagues at Eurex Clearing and Eurex Repo. We at Clearstream are proud to contribute to the ECB’s exploratory trials as market DLT operator with our leading digital securities platform D7.” About Eurex Eurex is the leading European derivatives exchange and, with Eurex Clearing, one of the leading central counterparties globally. As architects of trusted markets characterized by market liquidity, efficiency, and integrity, we provide our customers with innovative solutions to seamlessly manage risk.