Eurex Clearing in the ECB pilot project for digital wholesale money

Eurex Clearing took part in the Eurosystem’s exploratory work on new technologies for the wholesale settlement of central bank money. The initiative, led by the European Central Bank (ECB), aims to explore the potential of distributed ledger technology (DLT) to improve financial market infrastructures. On October 22nd and 23rd, a production test with the Banque de France DLT system was successfully completed on site at the Deutsche Börse Group headquarters.

Eurex Clearing has successfully tested cash settlement via the Banque de France general ledger. Three other central banks were involved in these attempts: the Deutsche Bundesbank, the Dutch De Nederlandsche Bank and the Banque Centrale de Luxembourg. ABN Amro Bank, ABN Amro Clearing Bank, Rabobank, Clearstream and Eurex Repo also took part in this cooperation. The testing focused on two main use cases: centrally cleared repo transactions and intraday margin calls. The subject of the tests was a native digital commercial paper issued by ABN Amro on Clearstream’s D7 platform and traded on the Eurex Repo F7 platform. This is the first time that Eurex Clearing is managing its own wallet based on a Eurosystem’s DLT technology.

Reaffirming the essential role of CCPs in digital ecosystems

The tests demonstrated the robust resilience of Eurex Clearing’s clearing processes, which function effectively in both legacy systems and DLT-based environments. This adaptability ensures that existing clearing processes can be seamlessly integrated into any technological framework. In addition, the tests have provided important insights into the impact of introducing new technologies. These tests have clearly shown that counterparty credit risk remains unchanged regardless of the underlying technology. This result highlights that the transition to DLT does not fundamentally change the risk profile associated with counterparties.

Eurex Clearing is a pioneer in digital solutions

As a trusted financial market infrastructure, Eurex Clearing is actively preparing for the digital transformation of the financial industry and ensuring that its risk models and methodologies maintain market integrity and security. The exploratory work will lay the foundation for future industry standards, particularly for interoperability between DLT platforms and traditional finance, in which financial market infrastructures such as CCPs will play a crucial role. This initiative highlights the importance of integrating new technologies to support the broader clearing ecosystem and maintain stability and efficiency in financial markets.

Claudine Hurman, Director of the Infrastructure, Innovation and Financial Markets Directorate (DIIF) at the Banque de France, emphasizes: “The collaboration with Deutsche Börse Group – both Eurex Clearing, Eurex Repo and Clearstream – in these trials has been invaluable in ensuring “that the solutions are available” to meet the needs of everyone involved. These efforts are critical to integrating distributed ledger technology into financial market infrastructures and paving the way for the future of digital finance.”

Jens Janka, COO and Member of the Board of Eurex Clearing AG, summarizes: “Eurex Clearing is proud to be taking part, together with Eurex Repo and Clearstream, in the ECB’s exploratory work on new technologies for the wholesale settlement of central bank money. These initiatives are critical to advancing the integration of distributed ledger technology into financial market infrastructures. Our collaboration with the clearing community and central banks underscores our commitment to innovation and the future of digital finance.”

Jens Hachmeister, Head of Issuer Services & New Digital Markets at Clearstream, added: “We are pleased to continue to shape the future of a connected digital European settlement landscape together with the ECB and our colleagues at Deutsche Börse Group at Eurex Clearing and Eurex Repo. “. We at Clearstream are proud to contribute to the ECB’s exploratory attempts as a market DLT operator with our leading digital securities platform D7.”

Source: Eurex