HQLAᵡ (High Quality Liquid Assets) received very strong institutional backing from a collection of financial giants that include Deutsche Börse Group, BNY Mellon, CitiGroup, Goldman Sachs and Paribas Securities Services. The raise enables HQLA to build upon its transformational technology.
The HQLA blockchain platform is highly desirable for this group of top banks given that it facilitates intraday transaction settlements at far higher speeds than hitherto possible. The banks are able to trade these assets between themselves without changing custody of the asset – HQLA just changes the ownership on its digital collateral register.
The HQLA platform went live at the beginning of 2019 and other banks that have also been using it with success involve Credit Suisse, Commerzbank, and UBS.
One more institutional giant, invested from the beginning, is the Dutch bank ING.
The problem
The global securities market infrastructure is fragmented which causes bottlenecks and impedes the flow of collateral, leading to the main concern for banks – increased costs.
The HQLA solution
By leveraging R3 Corda technology HQLA uses digital collateral records to manage the real-time ownership transfer of baskets of securities, custody of which being maintained by trusted third parties.
HQLA allows market participants to administer their assets effectively, release trapped liquidity and reduce their risk. The fact that transactions take place on the blockchain means 100% transparency – a welcome addition to the ofttimes opaque situation of the past.
“Having something that can atomically settle and remove some element of the performance risk has huge value for the broader system,”
Mathew McDermott – Global Head of Digital Assets at Goldman Sachs.
HQLA’s state-of-the-art technology is able to bring market participants together by complying with market regulations for liquidity, mandatory clearing and margin requirements for OTC derivatives in a nigh on 13 trillion-euro market.
Up to now HQLAᵡ has concentrated on the European market, but with a need to facilitate liquidity in the US Repo market and both Goldman and JP Morgan operating here, we might well see HQLA and its digital layer technology platform being put to much-needed use.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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