Euroclear launches DLT solution

Arnaldur October 25, 2023

Euroclear launches its Digital Securities Issuance (D-SI) service, marking a significant milestone in its Digital Financial Market Infrastructure (D-FMI) strategy. This service facilitates the issuance, distribution, and settlement of fully digital international securities, specifically Digitally Native Notes (DNN), on Distributed Ledger Technology (DLT). The inaugural DNN was issued by the World Bank, raising EUR 100 million to support sustainable development activities and was listed on the Luxembourg Stock Exchange. Citi’s Issuer Services, TD Securities, and Euroclear Bank played key roles in the issuance process.

Operating within Euroclear’s D-FMI DLT platform, the D-SI service provides connectivity to the traditional settlement platform for secondary market operations on the DNN. This grants investors full access to trading venues and liquidity management facilities, ensuring compliance with the Central Securities Depositories Regulation (CSDR). Euroclear’s development of the D-FMI platform aligns with the company’s broader strategy to enhance digital infrastructure in global financial markets, acknowledging the transformative potential of DLT in reshaping capital markets.

This development reinforces the trend of major financial institutions embracing blockchain technology to tokenize real-world assets, enhancing efficiency, reducing operational costs, and promoting transparency and accessibility in financial markets. According to estimates by digital asset investment firm 21.co, the market for tokenized assets could grow significantly, reaching between $3.5 trillion to $10 trillion by the end of the decade.

“Euroclear has been at the forefront of innovation in financial markets for more than 50 years. Today’s launch marks an important moment for our clients and for the potential of digital assets. We strive to deliver technology solutions that empower investors, foster market transparency and support the growth and stability of all market participants.” said Lieve Mostrey, Euroclear group CEO. “The integration of DLT in asset issuance is a critical step forward in the evolution of our ecosystem’s digital capabilities, as we continue to deliver on our goal of becoming a fully digital and data enabled Financial Market Infrastructure.”

“A transition to digitisation is underway in the capital markets. Euroclear’s new service offers issuers and investors an opportunity to take another step along this journey. The World Bank, as the issuer of the world’s first blockchain bond, is pleased to now be the first issuer to participate in this new service which offers full scalability and transparency” said Anshula Kant, Managing Director and Chief Financial Officer, World Bank Group.

“We are pleased to partner with Euroclear and the International Bank for Reconstruction and Development, on this innovative issuance. It has the potential to transform the way in which the debt capital markets operate, and shows the continued value of the international issuance model. Together we continue to progress innovative solutions that deliver transparency, efficiency, liquidity, and improved client experience” said Andrew Mulley, EMEA Head of Citi’s Issuer Services.

Riaz Ahmed, President and CEO, TD Securities added: “TD Securities is delighted to have acted in partnership with Euroclear, the World Bank and Citi as the issuer agent on this transaction, which marks another crucial milestone on the path to revolutionise and digitize global capital markets. The World Bank continues to demonstrate their commitment to innovation in financial markets and once again takes a leading role with this trade. We are pleased to work alongside Euroclear, the World Bank and Citi as the issuer agent and we look forward to seeing how increasing utilisation of DLT technologies in capital markets will deliver opportunities that will benefit all market participants.”

About Euroclear

Euroclear group is the financial industry’s trusted provider of post trade services. Guided by its purpose, Euroclear innovates to bring safety, efficiency and connections to financial markets for sustainable economic growth. Euroclear provides settlement and custody of domestic and cross-border securities for bonds, equities and derivatives, and investment funds. As a proven, resilient capital market infrastructure, Euroclear is committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise. The Euroclear group comprises Euroclear Bank, the International CSD, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden, Euroclear UK & International and MFEXbyEuroclear.