HQLA^X -- working with leading Banks, Triparty Agents, Custodians, and Service Providers –- successfully concluded a feasibility initiative to address pain points in triparty collateral mobility. 

The group designed a new operating model that uses HQLA^X‘s platform to transfer securities collateral to - or between - multiple Triparty Agents without triggering cross-custodian settlements.  Adopting this model is expected to increase the speed and precision of collateral management activities, whilst reducing operating costs and risks for participants.

This new model allows Banks to fulfill collateral obligations in Triparty without needing to deliver securities out of their home custodian’s accounts. This is not possible in today’s market and it represents a significant step forward in settlement speed and efficiency.  Banks will therefore be able to take advantage of longer intra-day settlement windows and the ability to instruct transfers directly between Triparty Agents, since the HQLA^X platform uses distributed ledger technology as the single source of truth to validate the ownership of the securities at any given point in time.  

By leveraging the HQLA^X platform, Banks stand to benefit from accelerated and precise collateral mobility, lowering settlement charges and providing cost efficiencies, while Triparty Agents and Custodians will be able to benefit from retaining custody balances. 

The group created a legally secure and deliverable design and will now validate the business case in more detail with the intention to mobilise resources in 2025.

Banks represented in the group included HSBC, UBS, and Standard Chartered. Triparty Agents included JP Morgan and Clearstream.  Service Providers included Transcend and Pirum. These groups all joined HQLA^X and Deutsche Börse Group in formulating the target operating model.

Guido Stroemer, HQLA^X CEO, said: “The industry has been trying to solve for Triparty interoperability for over 20 years, and we are very excited that our feasibility study confirmed our platform as a scalable industry wide solution for collateral mobility across Triparty agents and custodians. The solution is here, now it’s up to the industry to implement it.”

Marton Szigeti, Head of Collateral, Lending & Liquidity Solutions, Clearstream, said: "Collateral mobility is a pre-requisite to efficient global capital markets. By leveraging HQLAᵡ's DLT platform, clients benefit from a seamless and efficient Triparty solution across borders. This collaboration marks a significant step forward in Clearstream’s and Deutsche Börse Group’s commitment to providing trusted and efficient solutions for the markets.”

Bimal Kadikar, CEO Transcend, said: “Clients need the ability to effectively deploy assets across venues to increase liquidity value and lower costs.  The technologies are now available to meet this challenge and industry providers have the opportunity to adapt and meet these client demands.”  

Todd Crowther, Head of Collateral Services, Pirum, said: “Pirum is delighted to be involved in the HQLA^X working group, which reinforces our commitment to supporting clients with connectivity to the wider ecosystem of current and future technology solutions. This collaboration is a key pillar of our CollateralConnect vision of utilizing digital platforms to drive further efficiencies in collateral management.”