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D7

7 Market Technology: D7Digitising Financial Instruments

Dematerialization of securities and digitization of issuance processes is at the forefront of the financial industries’ digitization. This transformation requires a new digital generation of financial market infrastructure.

The D7 platform

D7
D7 platform is a regulatory compliant, fully digital post-trade infrastructure for financial institutions to issue electronic securities 

As a cloud-backed DLT-ready platform, it enables market participants to digitise their financial products with access to existing central infrastructure and new decentral networks and markets alike.

The D7 platform leverages the newly created Digital Instruments, a digital description of the securities. D7 will therefore provide a fully digital alternative to conventional physical issuance and processing of securities. It paves the way for same-day-issuance and paperless and automated straight-through processing throughout the entire value chain of issuance, custody, settlement and asset servicing for digital securities.

Video: D7 – the streaming platform of the financial markets


 

FAQ

What exactly is the D7 platform?

D7 is a regulatory compliant, fully digital post-trade platform for financial institutions to issue electronic securities leveraging Digital Instruments, a digital description of the securities. D7 will therefore provide a fully digital alternative to conventional physical issuance and processing of securities. We thereby aim to digitize the financial products itself, unlocking great efficiency benefits for our customers and the market as whole.

What are the benefits of the D7 platform?

  • The new platform offers a flexible, fit for purpose infrastructure that enables the creation and end to end processing of eWpG-compliant electronic securities leveraging the so-called Digital Instrument (a digital description of electronic securities under German eWpG) - alongside the entire value chain of issuance, custody, settlement/payment and asset servicing. 
  • Digital Instruments act as a golden source providing full transparency and smart lifecycle management. As data objects, Digital Instruments provide a fully integrated interpretation and logic of the electronic securities data.
  • D7 paves the way for same-day-issuance (T+1h) and a high straight-through processing (STP) rate. 
  • The new platform allows for significant reduction of cost per unit and operational risks.
  • The newly defined common standards for Digital Instruments, interfaces and data will also lead to reduced legal and back-office costs.
  • The new infrastructure is enabling customers to use one network for multiple businesses, operated under one single rulebook.

In which countries will the D7 platform be available?

Recent regulatory developments in the European Union, and in particular countries/jurisdictions like Luxemburg, and Germany related to electronic securities and DLT have paved the way for making use of new technologies in important countries where DBG operates. In a first step, the D7 platform will be launched in Germany, and it is envisaged to extend it to Luxembourg and in further countries of the European Union in due course, based on respective applicable laws and regulations. 

Which services will be offered by the D7 platform and what are its key components?

D7 and the introduction of Digital Instruments is a first important step towards same-day-issuance and paperless, automated straight-through processing of electronic securities along the entire value chain including issuance, custody, settlement, payment as well as asset servicing for Digital Instruments. 
The key components and services of the D7 Platform are:

  • A Central Register System to enable issuance of electronic securities in compliance with the new German legislation (eWpG) as alternative to physical issuance of securities.
  • The DI Execution to create and process Digital Instruments, the digital description of (electronic) securities, to manage them alongside their entire value chain.
  • A Decentral Network to enable decentral functionality for Digital Instruments.
  • A Streaming Engine to ensure proper distribution of the DI towards the D7 participants

The different services and functionalities will be built up in a staggered approach. The first component of the D7 platform, the Central Register offered by Clearstream Banking AG, will be launched end of November 2021. Additional functionalities of D7 will be added step by step over the next years. Existing and new infrastructure will run in parallel during a longer transition period. In its future final stage, all D7 components and services will be operated under a harmonized rulebook. Furthermore, the D7 platform will connect to both: existing legacy infrastructure as well as distributed infrastructures and markets (see infographic).

What is a “Digital Instrument (DI)”?

  • A Digital Instrument is the digital description of an electronic security under German eWpG containing the business logic and acting as a data container.
  • It provides information about all events, actions, rules, legal documents and parties for the entire lifecycle of the electronic securities, incl. corresponding legal documentation.
  • The automated processes decrease administrational costs.
  • “Golden source of data”: Digital Instruments act as central source of information which finally results in less friction and reduced need for reconciliation.
  • The Digital Instrument is executable on various platforms. 

Will D7 be able to process crypto currencies and alternative assets?

At the outset, D7 services will focus on electronic securities – based on the recently launched new German legislation on electronic securities (eWpG)). With consecutive stages the extension to other asset classes and payment solutions is foreseen and will be further specified in due course.

Which are the technology partners chosen for the D7 platform?

The following technology partners have been chosen:

  • Digital Asset Holding for the Central Register, DI Execution and Decentral Network, providing their DAML language as smart contract engine as well as Canton as the ledger interoperability protocol
  • Microsoft Azure Blob Storage for Central Register
  • To complement the D7 offering R3 and VMware will also contribute their technology expertise

When will the platform be launched?

The first component of the D7 platform, the Central Register offered by Clearstream Banking AG, will be launched end of November 2021. Additional functionalities of D7 will be added step by step over the next years. Existing and new infrastructure will run in parallel during a longer transition period.