Investment Operations

DIGITIZING THE SECURITIES LIFECYCLE: CLEARSTREAM ENABLES FIRST DIGITAL SECURITIES ISSUANCE IN GERMANY

Clearstream Digital Assets
  • Digital instrument enables same-day issuance, being the next step towards digital financial markets  
  • First issuances in production performed by LBBW and Vontobel via Deutsche Börse’s D7 platform facilitated by Clearstream 
  • Roll-out to further jurisdictions and asset classes planned 

Clearstream says it has reached the next level of digitization of financial markets by creating the digital instrument on D7, Deutsche Börse’s digital post-trade platform, allowing European issuers to leverage the new infrastructure to issue digital securities. The first automated issuances were performed by LBBW and Vontobel, and facilitated by Clearstream, Deutsche Börse’s post-trade service provider. D7 is integrated within Clearstream’s global infrastructure and works as a connector between established networks and digital capabilities.

Digital instruments are smart objects that represent electronic securities. They contain all the relevant information needed throughout the lifecycle 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 asset servicing of securities across established and new financial networks and infrastructures. In this way, the digital instrument serves as a facilitator to streamline operational efforts, minimize reconciliation needs and reduce overall risk.  

Like this, Clearstream as part of Deutsche Börse Group says it will provide a fully digital alternative to conventional physical issuance for approximately 80 percent of German securities. The scope of this new D7 offering, according to Clearstream, includes warrants and certificates with further asset classes and jurisdictions planned in the future, in compliance with respective regulatory frameworks. 

“In line with our core mission to run innovative and future-proof infrastructures for our customers and the entire industry, we have now created the smart digital security,” said Jens Hachmeister, Head of Issuer Services & New Digital Markets at Clearstream. According to Hachmeister, this moves issuance of structured products from days to minutes and enables our clients and partners to quickly adapt to the changing market environment. “We are accelerating time to market and unlocking an entire new universe of product opportunities as we continue to venture towards fully digitized markets,” he added. 

Historically, German securities had to be issued as paper-based global notes and stored in a physical vault at the central securities depository, which usually took several days. Last year, the German regulator passed the electronic securities act, allowing dematerialized issuance and paving the way for automation in the securities lifecycle. Since December 2021, Deutsche Börse has been processing dematerialized securities via a central register, the first live D7 component.  

In addition to a highly automated trading process, a digitalized and efficient issuance and settlement process is of great importance for the retail-certificate business. “With the first pilot issue of an LBBW bonus certificate via the D7 platform, accompanied by Clearstream, we are taking the next technologically important step towards end-to-end digitalization,” commented Jan Krüger, Head of Equity Markets at LBBW.