Securities issued directly on blockchain will be tradable on Eurex Repo, cleared by Eurex Clearing and eligible as margin collateral and in the ECB GC Pooling basket
Firms will be able to trade digital native instruments on Eurex Repo and clear them through Eurex Clearing. The change follows the CCP’s move to bring its traditional and digital business under one clearing framework, one rulebook and one unified risk model.
The instruments will be integrated into Eurex’s existing ecosystem and accepted as eligible margin collateral. This includes native digital issuances by sovereigns and supranationals such as the European Stability Mechanism (ESM). They will also become eligible for the European Central Bank (ECB) GC Pooling basket. That gives them access to Eurex’s established, liquid secondary market on the same terms as their traditional equivalents.
Tackling liquidity fragmentation
Eurex Clearing will concentrate liquidity for traditional and digital instruments in one place. As a result, clients will not need to build bespoke connectivity, manage separate risk models or put new legal agreements in place to take part in digital markets.
As a regulated CCP, Eurex Clearing novates and clears all transactions, providing settlement finality, multilateral netting efficiencies and default management. Eurex says this structural integration gives institutional participants the legal and regulatory certainty to scale their digital market activity.
Settlement through Clearstream
The initiative is part of Deutsche Börse’s vertically integrated model, in which Eurex works directly with Clearstream for settlement. Clearstream is transforming its CSD services to handle both traditional and digital assets through Clearstream Digital Infrastructure.
That includes settlement in wholesale central bank money via the Eurosystem’s Pontes solution, as shown by the ESM’s recent first live digital native bond issuance, which PostTrade 360° reported on.