Clearstream has reached the next level of digitisation of financial markets by creating the digital instrument on D7, Deutsche Börse’s digital post-trade platform. European issuers can now leverage the new infrastructure to issue digital securities. The first automated issuances were performed by LBBW and Vontobel, and facilitated by Clearstream, Deutsche Börse’s post-trade service provider. D7 is fully integrated within Clearstream’s global infrastructure and works as a connector between established networks and digital capabilities.
Digital instruments are smart objects that represent electronic securities. They contain all the relevant information needed throughout the lifecycle of a security, such as reference, listing and legal data, corporate actions and reporting information. They are technology-, asset-class- and location-agnostic, and enable same-day issuance, automated straight-through processing and asset servicing of securities across established and new financial networks and infrastructures. In this way, the digital instrument serves as a facilitator to streamline operational efforts, minimise reconciliation needs and reduce overall risk.
Like this, Clearstream as part of Deutsche Börse Group will provide a fully digital alternative to conventional physical issuance for approx. 80 percent of German securities. The scope of this new D7 offering includes warrants and certificates with further asset classes and jurisdictions planned in the future, in compliance with respective regulatory frameworks.
Jens Hachmeister, Head of Issuer Services & New Digital Markets at Clearstream, says: “In line with our core mission to run innovative and future-proof infrastructures for our customers and the entire industry, we have now created the smart digital security. This moves issuance of structured products from days to minutes and enables our clients and partners to quickly adapt to the changing market environment. We are accelerating time to market and unlocking an entire new universe of product opportunities as we continue to venture towards fully digitised markets.”
“In addition to a highly automated trading process, a digitalised and efficient issuance and settlement process is of great importance for the retail-certificate business. With the first pilot issue of an LBBW bonus certificate via the D7 platform, accompanied by Clearstream, we are taking the next technologically important step towards end-to-end digitalisation,” says Jan Krüger, Head of Equity Markets at LBBW.
Markus Schenk, Head Issuance Europe, Vontobel, is convinced: “The launch of the Digital Instrument represents a milestone on the way to a fully digital market infrastructure in Germany. The ability to bring our structured securities to market faster and more cost-efficiently in the future will ultimately have a positive impact on the client experience. We at Vontobel are proud to accompany the project from the very beginning and to provide valuable input. It was important for us to play our part in this significant market infrastructure project.”
Historically, German securities had to be issued as paper-based global notes and stored in a physical vault at the central securities depository, which usually took several days. Last year, the German regulator passed the electronic securities act, allowing dematerialised issuance and paving the way for automation in the securities lifecycle. Since December 2021, Deutsche Börse has been processing dematerialised securities via a central register, the first live D7 component.
As an international exchange organisation and innovative market infrastructure provider, Deutsche Börse Group ensures markets characterised by integrity, transparency and stability. With its wide range of products, services and technologies, the Group organises safe and efficient markets for sustainable economies. Its business areas extend along the entire value chain in exchange trading, including the admission, trading and clearing, and custody of securities and other financial instruments, the dissemination of market data, as well as the management of collateral and liquidity. As a technology company, the Group develops state-of-the-art IT solutions and offers IT systems all over the world.
As an international central securities depository (ICSD), headquartered in Luxembourg, Clearstream, which is part of Deutsche Börse Group, provides the post-trade infrastructure for the Eurobond market and services for securities from 59 domestic markets worldwide. With 16 trillion Euros in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities.
Landesbank Baden-Württemberg (LBBW) is both a Mittelstands-minded universal bank and the central bank of the savings banks in Baden-Württemberg, Saxony and Rhineland-Palatinate. With total assets of EUR 282 billion and 10,000 employees (as of 31 Dec. 2021), LBBW is one of the largest banks in Germany. Its core activities are the business with corporate customers, in particular small and medium-sized enterprises and the private customer business, as well as savings banks. A further focus is placed on real-estate financing as well as the customer-oriented capital market business with banks, savings banks and institutional investors. With a market volume of derivative securities of around EUR 8.3 billion (as of June 30, 2022) and a market share of over 13 %, LBBW is one of the leading issuers of structured securities.
Vontobel is a globally active investment firm with Swiss roots, specialized in wealth management, active asset management and investment solutions. Vontobel Holding AG shares are listed on the SIX Swiss Exchange and majority owned by the founding family. Their close ties to the company guarantee entrepreneurial independence, and the resulting freedom creates an obligation to assume social responsibility. As of June 30, 2022, Vontobel held CHF 208.6 billion of client assets, served from 26 world-wide locations.