Belgium-based bank Euroclear has partnered with the World Bank to launch the first digitally native security on the Luxembourg Stock Exchange. The €100 million digital bond, known as Digitally Native Notes (DNN), utilizes distributed ledger technology for the distribution and settlement of fully digital financial assets, according to a company press release.
Partnerships and Roles
Citi Group’s Issuer Services played a crucial role as the agent for issuance and payments during the blockchain-based issuance of digital securities. Canadian investment bank TD Securities also participated as the dealer in the process. “The integration of DLT in asset issuance is a critical step forward in the evolution of our ecosystem’s digital capabilities, as we continue to deliver on our goal of becoming a fully digital and data-enabled Financial Market Infrastructure,” stated Lieve Mostrey, CEO of the Euroclear group.
Advantages and Potential
R3’s Corda blockchain served as the underlying platform for this groundbreaking digital bond issuance, demonstrating the trust placed in this emerging technology. The primary objective of this issuance is to establish a scalable framework that combines the benefits of digitization with increased accessibility and liquidity for bonds.
“Recognizing the potential of DLT to transform global capital markets, the launch will support the expansion of digital capabilities in the post-trade space,” the announcement stated.
This development not only has the potential to transform the functioning of debt capital markets but also underscores the continued value of the international issuance model. Andrew Mulley, EMEA Head of Citi’s Issuer Services, emphasized the significance of the launch in furthering the adoption of digital technologies in capital markets.
The partnership between Euroclear and the World Bank extends beyond this digital bond issuance. It encompasses various offerings by Citi, including digital currencies, trade securities, custody services, and asset servicing. The Luxembourg Stock Exchange, which previously admitted three digital securities issued by Société Générale, continues to foster innovation in the industry.
