clear stream has reached the next level of digitization of financial markets by creating the digital instrument in D7, Deutsche Börse’s digital post-trading platform. European issuers can now take advantage of the new infrastructure to issue digital securities. The first automated issues were made by LBBW and Vontobel, and facilitated by Clearstream, Deutsche Börse’s post-trade service provider. D7 is fully integrated within Clearstream’s global infrastructure and functions as a connector between established networks and digital capabilities.
Digital instruments are smart objects that represent electronic values. They contain all the relevant information needed throughout the life cycle of a security, such as reference, listing and legal data, corporate actions and reporting information. They are technology, asset class, and location agnostic, and enable same-day issuance, automated straight-through processing, and servicing of securities assets across new and established financial networks and infrastructures. In this way, the digital instrument serves as an enabler to streamline operational efforts, minimize reconciliation needs, and reduce overall risk.
Thus, Clearstream, as part of the Deutsche Börse Group, will provide a fully digital alternative to conventional physical broadcasting for approx. 80 percent German stock. The scope of this new D7 offering includes warrants and certificates with more asset classes and jurisdictions planned in the future, in accordance with the respective regulatory frameworks.
Jens Hachmeister, Head of Issuer Services and New Digital Markets at Clearstream, says: “In line with our core mission of running innovative and future-proof infrastructures for our customers and the entire industry, we have now created intelligent digital security. This moves the issuance of structured products from days to minutes and allows our clients and partners to quickly adapt to the changing market environment. We are accelerating time to market and unlocking a whole new universe of product opportunities as we continue to venture into fully digitized markets.”
“In addition to a highly automated trading process, an efficient digitized issuance and settlement process is of great importance for the certificate retail business. With the first pilot issuance of an LBBW bonus certificate via the D7 platform, accompanied by Clearstream, we are taking the next technologically important step towards end-to-end digitization.” says Jan Krüger, Director of Stock Markets at LBBW.
Markus Schenk, Head Issuance Europe, Vontobel, is convinced: “The launch of the Digital Instrument represents a milestone on the path to a fully digital market infrastructure in Germany. The ability to bring our structured securities to market faster and more profitably in the future will ultimately have a positive impact on the client experience. At Vontobel we are proud to accompany the project from the beginning and provide valuable input. It was important for us to play our part in this important market infrastructure project.”
Historically, German securities had to be issued as paper global notes and stored in a physical vault at the central securities depository, which typically took several days. Last year, the German regulator passed the electronic securities law, allowing dematerialized issuance and paving the way for automation in the securities lifecycle. Since December 2021, Deutsche Börse has been processing dematerialized securities through a central registry, the first live D7 component.
About Deutsche Borse
As an international exchange organization and innovative provider of market infrastructure, the Deutsche Börse Group guarantees markets characterized by integrity, transparency and stability. With its wide range of products, services and technologies, the Group organizes safe and efficient markets for sustainable economies. Its business areas extend throughout the entire value chain of stock trading, including the admission, trading and clearing and custody of securities and other financial instruments, the dissemination of market data, as well as the management of guarantees and liquidity. As a technology company, the Group develops state-of-the-art IT solutions and delivers IT systems around the world.
As the Luxembourg-based International Central Securities Depository (ICSD), Clearstream, part of the Deutsche Börse Group, provides post-trade infrastructure for the Eurobond market and services for securities in 59 national markets worldwide. With €16 trillion in assets under custody, Clearstream is one of the world’s largest domestic and international securities custody and settlement firms.
Landesbank Baden-Württemberg (LBBW) is a universal bank with a Mittelstands mentality and the central bank of the savings banks in Baden-Württemberg, Saxony and Rhineland-Palatinate. With total assets of EUR 282 billion and 10,000 employees (as of December 31, 2021), LBBW is one of the largest banks in Germany. Its main activities are business with corporate clients, particularly small and medium-sized companies, and business with private clients, as well as Savings Banks. Another focus is on real estate financing as well as customer-oriented capital market business with banks, savings banks and institutional investors. With a derivative securities market volume of around EUR 8.3 billion (as of June 30, 2022) and a market share of more than 13%, LBBW is one of the largest issuers of structured securities.
Vontobel is a globally active investment firm with Swiss roots, specializing in wealth management, active asset management and investment solutions. The shares of Vontobel Holding AG are listed on the SIX Swiss Exchange and are majority owned by the founding family. Their close link with the company guarantees business independence, and the resulting freedom creates an obligation to assume social responsibility. As of June 30, 2022, Vontobel had CHF 208.6 billion in customer assets, served from 26 locations worldwide.