Deutsche Boerse Buys Stake in HQLAx to Leverage Blockchain for Securities Lending

German stock exchange operator Deutsche Boerse Group said on Tuesday it had bought a minority stake in HQLAx, a fintech company focused on liquidity and collateral management solutions, for a “single-digit euro million amount”. Deutsche Boerse plans to collaborate with HQLAx to build a blockchain-based operating model for securities lending.

Under the deal, the German bourse operator will get two board seats at HQLAx, which will be represented by Jens Hachmeister, who leads the company’s blockchain initiatives, and Philippe Seyll, who leads the group’s Global Securities Financing division.

Seyll commented on the deal:

“This collaboration will enable us to create a true blockchain-based solution in the post-trade arena. Together with like-minded partners such as HQLAx we want to create a standardized lending marketplace.” “It will allow market participants to redistribute collateral liquidity more efficiently by improving interoperability for pools of securities residing in multiple, disparate settlement systems and locations,” he added.

In March 2018, Deutsche Boerse, which operates Eurex exchange, teamed up with HQLAx to develop a securities lending system based on the Corda platform provided by R3.

The group said it might acquire another stake in HQLAx by the end of this year.

HQLAx CEO Guido Stroemer commented on the collaboration:

“This investment represents a major milestone for HQLAx, and it is another example of Deutsche Börse Group’s strong commitment to our platform. We look forward to our journey into production.”

The investment in HQLAx will be managed by Deutsche Boerse’s corporate venture capital branch DB1 Ventures. This represents the second investment by DB1 Ventures, which focuses on innovative technologies, including blockchain.

Deutsche Boerse’s move is part of a broader plan to invest in blockchain and other emerging technologies. In order to secure capital for the new technologies, the company is going through a massive restructuring.