Spanish bourse BME trials blockchain technology for collateral pledges

Spanish bourse BME has announced that it has successfully trialled blockchain technology for digitizing the certification process of collateral pledge.

Conducted in collaboration with Renta 4 Banco, the trial aimed to look into the potential of blockchain technology to eliminate the need to use and exchange physical certificates.

According to the official release, the proof-of-concept (PoC) involved the constitution and release of collateral pledged by Renta 4 Banco to cover customer’s positions at BME Clearing, BME’s central counterparty.

BME said that by using blockchain-based technology, it was able to “eliminate the creation and exchange of physical certificates in these transactions, digitizing all the processes and ensuring that all participants in the Blockchain have access to the information in real time.”

The PoC showed that blockchain could reduce the total time of end-to-end processes by more than 80%. It could also enhance participants’ operational and risk management as they will gain direct access to the information and participate in the validation of pledge agreements.

"DLT technology allows us to reduce times drastically and improve the operation and control of the system, providing legal certainty for electronically generated certificates and maintaining privacy and compliance with the General Data Protection Regulation,” Berta Ares, Head of Digital Transformation, BME, said.

BME said that it will continue to work with Renta 4 Banco on the developments necessary to allow the system to go live by the end of 2019.