Monday, 01 June 2020

Spanish stock market operator BME tests blockchain for collateral pledge

Spanish stock market operator Bolsas y Mercados Españoles (BME) and Renta 4 Banco have carried out their first test for the digitisation of the certification process of collateral pledge using blockchain.

The idea is to remove the use and exchange of physical certificates. The proof of concept (PoC) entailed the constitution and release of collateral pledged by Renta 4 Banco to cover customer’s positions at BME Clearing, BME’s central counterparty.

Berta Ares, head of digital transformation, BME, explains: “Distributed ledger technology (DLT) allows us to reduce times drastically and improve the operation and control of the system, providing legal certainty for electronically generated certificates and maintaining privacy and compliance with the General Data Protection Regulation (GDPR).”

Because the processes are digital, all participants in the blockchain have access to the information in real time.

According to BME, the PoC has shown a reduction in the total times of end-to-end processes exceeding 80%.

The system also helps participants’ operational and risk management as they will gain direct access to the information and participate in the validation of pledge agreements.

The PoC was developed by BME’s DLT-Lab, along with the Spanish central securities depository Iberclear.

That’s all the details for now, but BME and Renta 4 Banco will keep working on the developments necessary to allow the system to go live by the end of 2019.

Back in June 2018, BME was one of the names in a Spanish pilot test for improved issuing of warrants using blockchain.

CNMV, BME, and the group – formed by Banco Santander, BBVA, BNP Paribas, CaixaBank, Commerzbank and Societe Generale – worked on the project Fast Track Listing (FTL).

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