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Spanish Bourse BME Pilots Blockchain-powered Collateral Pledge Certification

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Spanish bourse Bolsas y Mercados Españoles or BME, successfully piloted the digitization of the collateral pledge certification process using blockchain technology. This eliminated the need to use and exchange physical paper certificates, and also facilitated real-time access to information.

BME worked with Spanish central securities depository Iberclear and investment services firm Renta 4 Banco for the proof-of-concept (PoC). BME and Renta 4 Banco expect the system to go live by the end of 2019 after working on the necessary developments needed.

The PoC saw the constitution and release of collateral pledged by Renta 4 Banco to cover customer's positions at BME Clearing, BME's central counterparty.

The process also provides legal certainty for electronically generated certificates and maintains privacy and compliance with the General Data Protection Regulation.

The PoC showed an over 80 percent reduction in the total time taken for the end-to-end processes and also improved the participants' operational and risk management. All the participants gained direct access to the information and participated in the validation of pledge agreements.

The PoC was fully developed by BME's DLT-Lab, through which BME analyzes and explores the use of Blockchain technology in the digitalization of processes.

DLT-Lab has worked together with those infrastructures involved in the process and the BME subsidiaries BME Clearing, Iberclear and Renta 4 Banco as the pilot firm.

Recently, Germany's Commerzbank and Deutsche Börse successfully executed a legally binding settlement of a repo transaction using blockchain. The pilot transaction was part of a joint PoC to examine the possibility of using blockchain technology in securities settlement.

In February, Spanish bank Banco Bilbao Vizcaya Argentaria SA or BBVA, also issued a structured green bond for Spanish insurance company MAPFRE, with the terms and conditions being negotiated using blockchain technology.

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