On Tuesday, exchange operator Nasdaq has announced that its clearing unit, together with the service provider for securities ABN Amro Clearing and financial companies and EuroCCP Euroclear, has developed a blockchain-based platform for transmission of Central counterparties when trading securities.
The press release says that the platform will help to cover margin calls (request for payment of additional funds from the broker) via a distributed network of traders, brokers and intermediaries.
Nasdaq took over the development of proof of concept (PoC) for a distributed network, and ABN AMRO Clearing and EuroCCP have created an external interface and integration services.
In addition, clearing house Euroclear handled the transfer of mortgage collateral, thereby making the monitoring of compliance with regulations and ensuring that the agreement was final.
The current processing system of transfer of mortgage securities were changed in connection with the increase in the number of trading hours and the need for centralised clearing of derivatives traded in the OTC market, in accordance with the rules regulating the European market infrastructure (EMIR).
The relevance of the emergence of effective solutions collateral securities became significant also in connection with the increase in the number of buyers who want to spend clearing their derivatives transactions. In addition, they have the need to cover margin calls, despite working in different time zones.
According to a press release, an innovative solution using the proof of concept will allow market participants “to cover margin calls within a few minutes.”
“This decision will allow us to protect against counterparty risks in transactions with shares in the after hours, at the same time reducing the complexity of the operation,” — said the Executive Director of EuroCCP Diana Chan (Diana Chan).
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