Following an undisclosed investment into Hqlax from Dutch multinational bank ING on March 6, CryptoX spoke to Nick Short, the COO of tokenized securities firm.
Short describes ING as one of the company’s “longest-standing strategic partners,” emphasizing that the two firms have collaborated in developing and testing Hqlax’s tokenized securities platform for over two years.
The two companies first partnered in 2017, with Hqlax launching an initiative to “develop DLT-driven solutions for more efficient and cost-effective liquidity management and collateral management in the global securities financing markets” alongside enterprise blockchain firm R3 and five banks including ING.
ING conducts first live transaction on Hqlax platform
In early 2018, ING and Credit Suisse executed a live transaction on the Hqlax platform — swapping securities baskets valued at nearly $28 million using the application.
The Hqlax platform went live during December 2019, with ING’s blockchain team developing the initial version of the application.
The platform enables investors to redistribute collateral by exchanging ownership of tokenized securities on Corda’s blockchain without requiring the movement of the underlying assets.
Nick Short describes the platform as “facilitating more efficient collateral management of both high-quality liquid assets (HQLA) and non-HQLA via [a] four-layer operating model,” explaining:
“The digital collateral registry layer enables delivery-versus-delivery (DvD) ownership transfers of baskets of securities via digital collateral records (DCRs). This eliminates the current, operationally onerous, requirement to move securities from one custody location to another. We make this possible via integration with the leading Eurex Repo F7-trading system where Hqlax platform transactions are executed, and a Deutsche Börse-owned Trusted Third Party (TTP) entity, which connects the custodians/tri-party agents to the digital collateral registry.”
Short indicated that Hqlax plans to exclusively target institutional clients, stating that they have no current plans for the retail market, adding that, “We remain focused on the many opportunities that we see to enable frictionless ownership transfers of assets for institutions.”
Hqlax to onboard more banks during 2020
Looking to the rest of 2020, Short states that Hqlax is currently onboarding Commerzbank, Credit Suisse, UBS, and several other financial institutions onto the platform.
The company also plans to add more custody locations starting with J.P. Morgan, which Short states “is in the process of becoming the third tri-party agent in the Hqlax operating model, alongside Clearstream Banking S.A. and Euroclear Bank.”
Short also said that Hqlax will look to expand its products to address specific “pain points” in the securities lending markets, including collateral upgrade and downgrade transactions, digital collateral re-use, and intraday trading.
