The main function of the platform is the transfer of collateral to the central parties during the exchange trading of securities
Nasdaq on Tuesday announced the availability of a prototype of a platform based on the blockchain, the main function of which is the transfer of collateral to the exchange during trading. The project is being developed in conjunction with BN AMRO Clearing and the financial companies EuroCCP and Euroclear.
The final product, according to the authors’ intention, will establish interaction between all parties to transactions when obtaining collateral and working with deposits (whose function is to cover unforeseen losses). Nasdaq in the project took the role of the developer of the blockchain, and the partners of the exchange started creating an interface and debugging various services. Euroclear, as a large clearinghouse, ensures the transfer of collateral, guarantees the parties the fulfillment of all obligations and monitors compliance with legal requirements.
Additional trading hours and requirements for clearing secondary assets modify the existing process of processing collaterals: in particular, the changes are mentioned in the Rules for Regulation of the Infrastructure of the European Financial Market. However, the growth in the number of players, for example, institutional firms and investment managers, create a demand for convenient instruments for managing collateral. In particular, it is necessary to solve the problem of different time zones.
The development of Nasdaq solves these problems. The head of EuroCCP Diane Chan even said that the new technological solution can be “extremely useful” in solving urgent problems. “With such tools,” he adds, “it will be possible to efficiently shield customers from the risks of non-fulfillment of exchange obligations, reducing the level of technical difficulties. Today, for example, we are still limited by the hours of work of banks in Europe or by local conditions in other time zones. “