ING has invested in securities lending platform HQLAx, which went live in December 2019. ING’s blockchain team developed the initial version of the HQLAx application, which uses blockchain to facilitate trading of high-quality liquid assets (HQLA). Financial details were not announced.
Banks need HQLA to meet tougher liquidity requirements under Basel III. These are assets that can easily and immediately be converted into cash without losing their value. However, holding too many lowers their return. Efficient trading allows banks to optimize their balance sheets.
“HQLAx enables market participants to redistribute their collateral by exchanging the ownership of tokenized securities on Corda’s blockchain platform, which no longer requires the underlying securities to move across users. This removes settlement barriers and improves collateral fluidity, which in turn allows users to manage their liquidities easier, faster and more efficiently,” said Mariana Gomez de la Villa, head of ING’s blockchain team.
ING and HQLAx partnered in 2018 to carry out the first-ever live securities trade on a blockchain platform. Together with Credit Suisse, we swapped €25 million worth of HQLA using the collateral lending application of HQLAx on R3’s Corda distributed ledger platform.