Operator of Frankfurt Stock Exchange: ‘Blockchain Has the Potential to Disrupt the Capital Markets Infrastructure’

Deutsche Boerse Group, the owner and operator of Frankfurt Stock Exchange, Germany’s largest stock exchange, announced on 30 August 2018 that it had set up a “DLT, Crypto Assets and New Market Structures” division in order to use the full potential of blockchain technology across its businesses.

Jens Hachmeister, the managing director this division, gave an interview during which he talked about about the importance of blockchain technology, his new team, and his own motivation to drive this growth area to the next level for the Group. There were three main questions that he dealt with:

Q: Why is the technology so important for the financial markets infrastructure?

"From Deutsche Börse’s point of view, the DLT/blockchain technology is a key opportunity for the creation of new market structures, adding new products onto our present structures and enhancing our existing offerings. Its potential cuts across our entire value chain – pre-IPO/listing, trading and clearing, settlement and custody, and even the data and analytics business. Of course, the expectations are high and not all of them will be fulfilled – blockchain will not be the answer to all our questions. Yet the digital economy in general is heading for decentralisation. In future, there will be more peer-to-peer governed marketplaces and less intermediaries. In that regard, blockchain has the potential to disrupt the capital markets infrastructure."

Q: Why set up a dedicated DLT, Crypto Assets and New Market Structures team?

"We see that several market offerings based on DLT/blockchain technology cut across the Group’s value chain already, challenging our traditional market infrastructure – for example equity funding innovations through initial coin offerings (ICOs), decentralised secondary market platforms, or blockchain-based custody solutions just to name a few. Deutsche Börse has been active with the technology in a first phase of ideation and exploration. We invested in various initiatives to create a sound understanding of the trends, the technology and its potential within the traditional segments of our value chain."

"However, these explorative steps have not been coordinated on a Group-wide level. In order to use the full potential of the technology for our businesses, to generate efficiencies and create revenues, a centrally steered approach is necessary to make a greater impact."

Q: What are the challenges facing this new team and what drives you?

"Looking at the pace of technological progress and the transformational potential that lies in Blockchain, we probably stand at the beginning of a new era that could be disruptive for the whole industry. The challenge is that we don’t exactly know where this will lead to. The possibilities this new technology offers, are fascinating and it is great to have the opportunity to hopefully make significant contributions and to drive this topic forward for the Group."

On 26 March 2018, Deutsche Börse Group announced that it was partnering with HQLA X to build an innovative securities lending solution on the R3's Corda blockchain platform.

And on 2 August 2018, as covered by CryptoGlobe, Boerse Stuttgart, Germany’s second-largest stock exchange announced that it was creating "an end-to-end Infrastructure for digital Assets."

Featured Image Courtesy of Duetsche Boerse Group