Eurex Clearing will clear native digital instruments alongside traditional securities.

The company will run both under one rulebook and one risk model, a setup it calls a hybrid central counterparty (CCP).

Digital instruments, including issuances by the European Stability Mechanism (ESM), will trade in the GC Pooling segment of Eurex Repo.

Eurex Clearing will clear these trades and accept the assets as margin collateral.

They will also count as eligible collateral in the ECB GC Pooling basket. According to the company, this puts them on equal terms with traditional assets.

Clients can reach these assets through the clearing setup they already use. They will not need new connections, other risk models or new legal agreements, the company said.

“Instead of creating isolated digital islands that fragment liquidity and trap capital, Eurex Clearing is building a bridge between both ecosystems,”

said Laura Bayley, Chief Executive Officer at Eurex Clearing.

As a regulated CCP, Eurex Clearing takes on and clears every trade. This gives digital trades the same settlement finality, netting and default management as traditional ones.

The plan connects with Clearstream, another Deutsche Börse Group firm. Clearstream is changing its depository services to hold both traditional and digital assets.

Its platform lets clients move securities and cash between traditional and blockchain systems.

Settlement can take place in central bank money through the Eurosystem’s Pontes platform. The ESM used this route for its recent digital bond issuance.

Together, Clearstream and Eurex aim to cover each stage of the digital post-trade process. This spans issuance, repo trading, settlement, custody and the reuse of collateral.

Featured image: Edited by Fintech News Switzerland, based on image by starmultikharisma via Magnific.