Euroclear: Revolutionising capital markets through the power of digitisation

Euroclear has settled its first digital bond, a World Bank issuance on the Luxembourg Stock Exchange that raised 100 million euros ($106 million) for sustainable development activities. This is not a sandbox or proof of concept project. It is a live market issuance, and it demonstrates the role distributed ledger technology (DLT) can play in transforming capital markets.

This month, Euroclear announced the launch of its Digital Securities Issuance (D-SI) service, a groundbreaking initiative as part of Euroclear’s Digital Financial Market Infrastructure (D-FMI) strategy. 

Euroclear’s D-SI service facilitates the issuance, distribution, and settlement of fully digital international securities, named Digitally Native Nodes (DNN), powered by DLT. At the heart of this revolutionary milestone is Corda, R3’s enterprise distributed technology platform, which has played a pivotal role in this innovation.

DLT in financial markets 

The inaugural DNN was issued by the World Bank (International Bank for Reconstruction and Development, IBRD) and raised EUR 100 million to support the financing of the World Bank’s sustainable development activities. The bond was listed on the Luxembourg Stock Exchange, with Citi’s Issuer Services acting as the issuing and paying agent, TD Securities as the dealer, and Euroclear Bank as the issuer Central Securities Depository.

Euroclear’s digital bond sets a new standard for capital markets and signifies a landmark moment in the ongoing D-FMI initiative. It is a testament to the potential of DLT to reshape the financial landscape, with the promise of greater efficiency, transparency, and trust. This is a remarkable step towards a more interconnected and digitised future for financial markets.

The inaugural issuance is just the opening act in a series of bonds that the World Bank plans to issue on Euroclear’s DFMI platform, all underpinned by Corda. Financial Market Infrastructures (FMIs), including major clearing houses like Euroclear, are playing a central role in redefining the financial landscape. 

Recent developments in the UK, such as the Edinburgh reforms and the Digitisation Taskforce, along with the government’s Digital Securities Sandbox project, are looking at how the UK can digitise and modernise financial markets through streamlining and modernising asset issuance, management and reporting.

However, Europe is pushing ahead, and earlier this year the European Investment Bank (EIB) launched the first sterling digital bond on a private blockchain in partnership with BNP Paribas, HSBC and RBC Capital Markets. The Swiss Stock Exchange has also issued a digital bond using blockchain.

Driving innovation forward 

Many previous deployments of digital bonds have been proof of concepts. The launch of Euroclear’s D-SI service marks a significant milestone in DLT being applied in highly regulated markets. Euroclear’s digital bond is a live market issuance – not a proof of concept project – and it demonstrates how DLT can be leveraged in financial markets. 

Euroclear’s development of its D-FMI platform is not only an integral piece of the group’s overall strategy to advance digital infrastructure across financial markets, but also has the potential to reduce costs, complexity, and length of the bond issuance process, whilst improving security. 

This is a real-world example of regulated institutions using technology to tokenize real-world assets and drive innovation forward. This clearly demonstrates the role DLT can play in transforming capital markets.

Modernising UK capital markets

This work in Europe has important implications for the UK and its approach to modernising financial markets – it is a major step forward for the digitisation of assets with a real world issuance linking back to a core financial market infrastructure. 

Here at Chatsworth, we look forward to seeing more efforts be made to harness new technologies to boost the competitiveness of capital markets. In the UK, we’ve been leading the call for the City to embrace digitisation and maintain the UK’s reputation as the world’s most competitive global financial centre. 


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