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Deutsche Börse Group Hyperledger Case Study
Technology Category
- Application Infrastructure & Middleware - Blockchain
- Infrastructure as a Service (IaaS) - Cloud Computing
Applicable Industries
- Finance & Insurance
Applicable Functions
- Business Operation
- Procurement
Use Cases
- Supply Chain Visibility
- Fraud Detection
Services
- System Integration
- Software Design & Engineering Services
The Challenge
Deutsche Börse Group (DBG) is a leading global exchange organization with a track record of innovation in information technology in the financial sector. DBG started to engage in the blockchain subject during 2015 and identified more than 20 use cases across its business units. Given the fact that blockchain was – and still is – in its infancy, to quickly gain internal knowledge, DBG selected a few use cases, relevant for its core business, for deeper analysis and subsequent realization of Proof-of-Concepts (PoCs). For the time being, DBG does not expect its core securities and derivatives trading business will shift to blockchain based trading systems, due to their large throughput and ultra-low latency requirements. DBG concentrated instead on use cases in the post trade arena and identified potential for blockchain applications in the area of clearing and settlement of securities & cash. Blockchain can improve the operational efficiency in these areas, i.e., shorter settlement times, reduction of reconciliation efforts, more efficient asset servicing, etc. In the long run, certain clearing and settlement functionality will likely materialize via blockchain being supported by clearing houses and CSDs to manage credit and counterparty risks.
About The Customer
Deutsche Börse Group (DBG) is one of the largest market infrastructure providers worldwide. It organizes markets characterized by integrity, transparency and safety for investors who invest capital and for companies that raise capital. It operates various markets on which professional traders buy and sell equities – the German cash market Xetra / Börse Frankfurt, derivatives via Eurex, Foreign Exchange via 360T and other financial instruments according to clear rules and under strict supervision. On the post trade layer, DBG operates Eurex Clearing, one of the largest clearing houses globally, as well as Clearstream, a leading international central securities depository (ICSD) and supplier of post-trading services. Amongst others Clearstream manages, safekeeps and administers the securities that it holds on behalf of its customers. Over 300,000 domestic and internationally traded bonds, equities and investment funds are deposited with Clearstream. It holds a volume of over 13 trillion euros in assets under custody. DBG is deeply dedicated to technological innovation. Electronification of trading and clearing has long been a key success factor for DBG, going back to the launch of Deutsche Terminbörse (DTB) in 1990, one of the first global electronic derivatives exchanges. As a global market infrastructure provider with a digitized focus, DBG keeps up with latest technology developments such as blockchain in order to establish “Exchange 4.0”, the exchange of the future, for the benefits of the sector and its customer base.
The Solution
DBG selected Hyperledger Fabric 0.6 as its initial platform for building blockchain prototypes, as it meets core requirements like providing modular architecture delivering high degrees of flexibility and scalability. Given the fact that Hyperledger is truly open source, it allowed DBG to familiarize with the underlying concepts, architectures and the realization of the various algorithms, thus to build-up in-house capabilities. Furthermore, its completeness allowed DBG to develop prototypes, including access management and user-interfaces in a relatively short time. DBG developed three use cases centered around its business dealing with securities settlement, asset servicing and collateral management for detailed investigation: Cross border collateral movement, Post trade processing for securities, and Collateralized Coins. For each use case, DBG developed a functional prototype based on Hyperledger Fabric and deployed it for testing and customer demonstration in the cloud. These prototypes contain besides pure commercial bank money payments between the different users also functionality to settle securities in delivery-versus-payment mode, thus being the basis for peer-to-peer securities trading.
Operational Impact
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