R3 powers Credit Suisse and ING live securities lending transaction debut
In the transaction, Credit Suisse and ING swapped baskets of securities valued at €25 million using the HQLAx app, known as CorDapp.
During the swap, Credit Suisse and ING agreed to transfer legal ownership of Dutch and German government securities on the platform using HQLAx digital collateral records (DCRs) while the underlying securities remained static within “unique” DCR-linked custody accounts held by Credit Suisse and ING at Credit Suisse (Switzerland).
Romain Dumas, head of rates repo and collateral optimisation at Credit Suisse Securities (Europe), says this event “speaks to the potential for blockchain technology to help improve collateral fluidity by creating a more efficient, transparent, and cost effective marketplace for liquidity transfers”.
HQLAX adds that CorDapp is now one step closer to production.
According to the companies, in a traditional settlement of a securities lending transaction, individual underlying securities are transferred between accounts.
However, the intent of the operating model for the HQLAX collateral lending application is to achieve a legal title transfer of baskets of securities through the transfer of ownership of the DCR-linked accounts themselves.
Law firm Clifford Chance was “integral” in helping to develop the legal architecture for transferring ownership of securities in this way using R3’s Corda blockchain platform.