A group of major players in the financial industry has developed a blockchain platform to transfer deposited collateral to central counterparties when trading securities.
Stockbroker Nasdaq has announced that its clearing arm, together with investment services firm ABN AMRO Clearing and financial services providers EuroCCP and Euroclear, has developed a joint proof-of-concept for a blockchain platform.
According to a press release, margin calls – the need to deposit funds or securities to cover potential losses – are to be covered by a distributed network of guarantors, borrowers and intermediaries.
Nasdaq developed the proof-of-concept, while ABN AMRO clearing and EuroCCP created a front-end interface and managed integration with the services.
Euroclear, one of the largest settlement houses in the world, handled the underlying security transfers to ensure that settlement was final and to monitor compliance.
Due to the increasing number of market participants, such as hedge funds and institutional companies, an efficient securities protection solution has become even more important. These companies have to cover margin calls even though they operate in different time zones.
Using the proof-of-concept would allow market participants to “complete the margin call, collateral delivery and return process within minutes”.
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