The Digital Financial Market Infrastructure (D-FMI) platform is our latest technology addition, based on Distributed Ledger Technology (DLT), aiming to improve market efficiency and connection through innovation.
D-FMI: Digital Financial Market Infrastructure
Harnessing DLT to power the financial market infrastructure of tomorrow
The first service offering available on D-FMI is Digital Securities Issuance (D-SI), supporting the issuance, distribution and primary market settlement of fully dematerialised international securities - Digital Native Notes (DNN), on DLT.
This is a key milestone in the digital journey of Euroclear and very much at the heart of our strategy and vision to become a data and digital enabled FMI.
In recent years, market participants have demonstrated a wider acceptance of DLT and its potential for significantly transforming global capital markets as it continues to evolve. The key driver for its success in both pre-trade and post-trade spaces will be technology that can provide open shared data in a controlled safe environment.
D-FMI is connected to the traditional settlement platform of Euroclear Bank for secondary market operations, granting investors full access to trading venues and liquidity management facilities. A key benefit of this service is full integration within Euroclear Bank which provides the solution with Central Securities Depositories Regulation (CSDR) compliance.
D-SI is the first service offering available on D-FMI. It offers a real DLT environment for the issuer ecosystem while enabling secondary market investors to trade in DNN on the traditional settlement platform – all in compliance with CSDR.
This means the deal is priced, the new securities are distributed, and the secondary market activity all settle on the same day.
As a first step, our D-SI service is available for the issuance on a non-syndicated basis of digital Euro Medium Term Notes (EMTN), i.e. DNNs, under programme with Euroclear Bank as the sole issuer Central Securities Depository (CSD).
Our D-SI service covers:
- the acceptance of DNNs with the automatic ISIN allocation (XS ISIN)
- the Issuing Agent authorising the creation of the DNNs
- the Delivery-Versus-Payment (DVP) settlement of the distribution in EUR or USD. Once issued, DNNs are held directly by participants in Securities Wallets on the D-FMI Component
- the transfer of the securities and cash proceeds from the D-FMI component to the traditional component of our settlement platform to facilitate secondary market operations, safeguarding the liquidity.
Investors wishing to purchase DNNs on the secondary market are able to hold and transfer such securities within Euroclear Bank through the traditional settlement platform.
Caisse des Dépôts et Consignations issued the first DNN in bearer form under French law. The bond was issued on D-FMI and settled through Banque de France (BdF) via its DLT solution, DL3S. The interoperability solution was co-designed by BdF and Euroclear, highlighting the importance of co-creation between private and public entities for successful adoption.
This issuance with a size of EUR100 million is part of the European Central Bank trials which aim to explore the potential of DLT for settling wholesale transactions in central bank money. Paris Europlace established a working group around this initiative. BNP Paribas’ Securities Services business served as the issuing agent, with Crédit Agricole Corporate and Investment Bank and Natixis Corporate & Investment Banking as dealers.
Asian Infrastructure Investment Bank (AIIB)’s first DNN issuance (rated Aaa/AAA) marks the first digital issuance in USD for Euroclear. The issuance, the first by an Asia-based issuer, raised USD300 million for AIIB’s sustainable development bond programme.
It is listed on the Luxembourg Stock Exchange. Citi acted as a dealer as well as issuing and paying agent, BMO Capital Markets as a dealer, and Euroclear Bank as the issuer central securities depository. Clearing of the bonds is also possible on the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU) and SIX Swiss Exchange (SIX).
The inaugural DNN was issued by the World Bank (International Bank for Reconstruction and Development, IBRD, rated Aaa/AAA), raising EUR 100 million to support the financing of the World Bank’s sustainable development activities and was listed on the Luxembourg Stock Exchange. Citi’s Issuer Services acted as the issuing and paying agent, TD Securities as the dealer, and Euroclear Bank as the issuer Central Securities Depository.
Benefit from direct access to the efficient and secure ESES settlement platform.
