Clearstream processed its first dematerialized securities issued in its central register D7, taking charge of the demat issuance by Deka Bank and by MünchenerHyp in collaboration with DZ Bank.
This marks the launch of the first live element of Deutsche Börse’s D7 platform, its digital post-trade infrastructure enabling financial institutions to issue and process financial products in digital format with access to established market infrastructure and new decentralized networks.
Following the introduction of new legislation in the German market which now allows digital issuance of securities in Germany, Clearstream’s electronic central register enables the issuance and registration of electronic securities for the first time.
Before the enactment of the eWpG, this new German law on electronic securities, the issuance of securities traditionally required a paper certificate.
With these rule changes, certificates and commercial papers with fixed amount aggregate notes can be registered in the central register.
This D7-based ledger connects to TARGET2-Securities, the securities settlement platform owned and operated by the Eurosystem, and streamlines the upstream and downstream data flows relating to listing, execution and settlement.
It also allows issuers and other stakeholders to monitor legal and processing status, fixed face values and redemptions, and other details of electronic securities held in Clearstream’s central ledger.
The strategy of the Deutsche Börse group is to support the entire digital value chain, from issuance to trading, clearing and risk management, including settlement and custody, as well as the associated services including users needs, such as currency exchange services, financing and data management.
Along with the publication of the Clearstream Central Register, market players including BNP Paribas, DZ BANK, Goldman Sachs, Raiffeisen Bank International and Vontobel, began user testing for DI Execution, the second phase of the D7 platform relating to the simulated issuance of structured products. .
From mid-2022, DI Execution will take over the issuance, management and operation of digital instruments throughout the product lifecycle.
Further enhancements to the D7 platform are expected to be rolled out over the next two years.
Regarding the exit from the electronic central register, Philippe Mueller, responsible for CSD issuing services at Clearstream, said: “The launch of D7 and the central register marks the end of paper certificates in Germany.
“Enabling the issuance and registration of digital financial instruments will increase the efficiency of the entire market, thereby laying the groundwork for the transformation to true digital financial markets. Clearstream offers issuers a seamless digital experience for issuance and the entire life cycle of securities, as well as a European-wide investor.
Germany’s electronic securities law, eWpG, was passed on June 10, 2021 and paved the way for the issuance of securities electronically rather than through a physical certificate.
The law is based on the German Federal Government’s blockchain strategy and targets bearer bonds and investment funds – with securities issued being referred to as a central ledger or crypto-security, depending on the type of ledger in which the security is issued.