German capital markets company Deutsche Börse and Swiss telecommunications company Swisscom have successfully settled a securities transaction using blockchain technology.
In an official press release shared with Coin Rivet, Deutsche Börse announced that a proof of concept developed with Swisscom had succeeded in jointly settling securities, with shares represented as blockchain-based digital tokens.
The proof of concept was designed to test the capabilities of distributed ledger technology and to demonstrate how blockchain could be used to perform immediate and transparent settlement of securities – such as company shares.
The pair also worked with a number of banking providers including Falcon Private Bank, Vontobel, and Zürcher Kantonalbank to facilitate the joint settlement process.
Johs Höhener, head of fintech at Swisscom, commented:
“DLT has the potential to reach a new level of speed and efficiency in the financial services sector. This proof of concept is an excellent example of successful collaboration and innovative strength across company boundaries.”
The new use of blockchain technology to represent securities will allow companies to digitise their share registers and make investing in companies and settling shares easier than ever before.
Blockchain infrastructure
To settle the securities transactions, the partner organisations used permissioned enterprise blockchains Corda and Hyperledger Fabric.
The transfer of the security tokens was powered by Custodigit, a cross-chain settlement service and institutional-grade custody solution. Custodigit is the result of a joint venture by Swisscom and the world’s first regulated digital asset bank Sygnum.
Swiss company Daura also took part in the process, providing a digital share registry for the issuance of blockchain-based shares. Daura allows Swiss stock companies to update share registries on the blockchain and tokenise their equity.
Peter Schnürer, CEO of Daura, said:
“The biggest winners of a functioning digital asset ecosystem are ultimately investors and companies, particularly small and medium-sized enterprises.”
By making it easier to issue and sell equity, small and medium-sized businesses can access capital markets which would normally be reserved for larger organisations.
Switzerland is home to both of the world’s first regulated digital asset banks, Sygnum and Seba.
The Alpine nation has been welcoming of blockchain technology innovation, which Höhener has claimed is integral in maintaining Switzerland’s “leading position in digital assets”.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.