Tokenized Securities Settled with Distributed Ledger Technology

Distributed Ledger Technology & Token Fueled Settlements

Deutsche Bank has recently announced the successful implementation of distributed ledger technology (DLT), in the settlement of tokenized securities.

This event, spearheaded by Deutsche Bank, saw the participation of various companies.

• Deutsche Bank
• Swisscom
• Falcon Private Bank
• Vontobel
• Zurcher Kantonalbank

The intent of this trial was to demonstrate the ability of distributed ledger technology to provide an instant, and secure, means of settling trades involving SME securities.

What does it mean to settle?

The settlement of a security refers to a, typically, 24-48hr time frame in which the exchange of money for a security is completed. It is, essentially, the act of delivering either money or stocks to trade participants.

With the usage of DLT and blockchain technologies, many envision a near-future in which this process can be done in a much timelier, and risk free, manner. In doing so, costs can be cut, transparency afforded, and time will be saved.

Growing Trend

The trialing and patenting of blockchain and distributed ledger technology among banks is a trend that appears to be growing with time.

Just recently, there were reports of the Royal Bank of Canada attaining patents, indicating an interest in opening a cryptocurrency exchange. While the bank has since spoken out against these intentions, the fact remains that they have shown their hand, and obvious interest in the technology.

In addition to the Royal Bank of Canada, the Bank of America has also shown a keen interest in attaining a variety of patents pertaining to blockchain and DLT.

While their intent is not necessarily clear, what these banks, and others, have shown us, is that they believe there to be potential in blockchain & DLT to change the way they operate. Recognizing that, they appear determined to not be left behind.

Beyond securing patents, there have been multiple instances, in recent months, of banks completing similar actions as those by Deutsche Bank. The following articles are only a couple of these examples.

World Bank Raises $33.8M via Tokenized Bonds

Santandar Completes Fully Digitized $20M Bond Settlement

Commentary

Upon announcing the success of their trial, representatives from many of the participating companies commented on the event. The following is what a couple had to say on the matter.

Johs Höhener, Head of FinTech, Swisscom, stated,

“DLT has the potential to reach a new level of speed and efficiency in the financial services sector. In order to maintain Switzerland’s leading position in digital assets, cooperation and new platforms are needed. This proof of concept is an excellent example of successful collaboration and innovative strength across company boundaries.”

Jens Hachmeister, Head of New Markets, Deutsche Börse Group, stated,

“It is of strategic importance for us to further develop the possibilities for settlement of securities transactions using DLT. This brings us one step closer to our goal of enabling the financial services industry in Germany and in Switzerland to efficiently use the potential of this new technology.”