As part of the Eurosystem exploratory work to test new technologies for the settlement of wholesale transactions in central bank money, from May to November 2024, Eligible Market Participants and Eligible Market DLT Operators will have the opportunity to explore the interoperability solution(s) of their choice offered by the Eurosystem. The Deutsche Bundesbank’s Trigger Solution is one of these three available solutions. It links DLT platforms operated by the market with the traditional Eurosystem payment system (TARGET), thus enabling the direct settlement of DLT-based wholesale transactions on participants’ existing RTGS accounts in central bank money. The exploratory work comprises both trials in the participants’ production systems and experiments in the test environments.

Here, we would like to inform you about the explorations already conducted with the Trigger Solution, their underlying use cases and the institutions involved. The list will be updated continuously with new trials and experiments that will have taken place.

Trial: Issuance of a digital registered bond

On 8 October, the use case team consisting of WIBank, Cashlink Technologies, Helaba and Bankhaus Metzler explored the same-day (t+0) issuance of a digital registered bond using the Bundesbank’s Trigger Solution for the cash settlement. The issuer of the registered bond was WIBank, Wirtschafts- und Infrastrukturbank Hessen. Helaba acted as cash settlement agent for WIBank, to which WIBank legally belongs. The investor of the registered bond was Bankhaus Metzler. The market DLT operator Cashlink tokenised the registered bond and provided the blockchain infrastructure for executing the settlement. The exploration was conducted as a trial; thus it comprised the issuance of a real registered bond that led to real and final bookings in TARGET, the Eurosystem’s payment system, by using the Bundesbank’s Trigger Solution.

Series of experiments on various secondary market constellations

On 18 and 25 September, the Baden-Württembergische Wertpapierbörse – part of Boerse Stuttgart Group – as market DLT operator, together with the market participants Commerzbank, Deutsche Bank, DZ BANK, LBBW, Bankhaus Metzler and V‑Bank, explored a wide range of secondary market transactions in various constellations using the Bundesbank’s Trigger Solution for the cash settlement. The focus was on the blockchain-based delivery-versus-payment settlement solution developed by BX Digital, a company of Boerse Stuttgart Group. In total two different scenarios with five digital securities – bonds, fund and equity – were explored: In a first scenario, trading took place between the aforementioned market participants, who themselves have access to TARGET, the Eurosystem’s payment system, and thus have their own account with the central bank. In a second scenario, EUWAX, a member of Boerse Stuttgart Group, joined as a market maker, which does not have its own TARGET access and thus made use of a cash settlement agent. Deutsche Bank assumed this role. In addition to the "happy path", i.e. that the transactions go through as planned, constellations were also explicitly and deliberately created that should not occur in practise in this way, but can occur in exceptional cases. For example that the securities agreed in the trade are not available at the time of settlement or that there is insufficient liquidity on the accounts. This deliberate failure of a transaction can be used to draw valuable conclusions about system behaviour and the processes implemented, which in turn helps to make the desired happy path more stable. All transactions were conducted as experiments and took place in the test environments; thus also in the T2 UTEST, the test environment of the Eurosystem’s payment system.

Experiment: Test of a Smart Derivative Contract

In the week from 23 to 27 September, DZ BANK explored the automated post-trade processing of a Smart Derivative Contract (SDC) using the Bundesbank’s Trigger Solution. The experiment simulated the processing of an over-the-counter derivative (“OTC”) – to be precise an interest rate swap – that was traded as a Smart Derivative Contract under real market conditions and then settled fully automated twice each day over several business days using a live market data feed. The resulting payments were settled via the Bundesbank’s Trigger Solution. DZ BANK was the first participant to operate an own node in the Trigger Solution DLT network for its SDC use case. This form of connectivity allows among others the use of own smart contracts; thus in the case of DZ BANK the smart derivative contract. In this configuration, a separate market DLT operator is not required. The experiment led to bookings in the T2 UTEST, the test environment of the Eurosystem’s payment system.

Trial: Issuance of a digital savings bank bond

On 24 September 2024, DekaBank, Sparkasse Dortmund and Helaba explored the issuance of a digital savings bank bond on the blockchain network of their technology partner SWIAT using the Bundesbank’s Trigger Solution. The registered bond was issued by Sparkasse Dortmund. Helaba acted as cash settlement agent for the savings bank. DekaBank took over the roles of the market DLToperator and registrar as well as the role of the investor on market participant side. The bond was issued same-day, i.e. in the technical jargon t+0. The use case was explored as a trial, thus taking place in the participants’ production systems and, using the Trigger Solution, led to real and final bookings on the RTGS accounts of Helaba and DekaBank in TARGET, the Eurosystem’s payment system.

Experiment: Execution of a centrally cleared intraday repo

On 12 September, the first repo experiment with the Bundesbank’s Trigger Solution and the use case team Eurex Clearing, Eurex Repo, DZ BANK, J.P. Morgan and Clearstream Banking AG took place. A simulated version of the commercial paper issued by DekaBank on the Deutsche Börse D7 platform at the end of June – also as part of the Eurosystem exploratory work – served as the underlying security for the intraday repo use case. DZ BANK, which was the investor in the above-mentioned issuance process, now acted as seller (collateral provider) in the course of the repo, while J.P. Morgan acted as buyer (collateral taker). The repo was carried out via Eurex Repo’s F7 trading system. Eurex Clearing performed the clearing of the transaction before it was settled by Clearstream Banking AG via Deutsche Börse’s D7 platform. The Bundesbank’s Trigger Solution was used for the cash settlement of the transaction and thus led to bookings on T2 UTEST, the test environment of the Eurosystem’s payment system. As the name suggests, the closing leg of the intraday repo was executed on the same day.

Trial: Issuance of a digital commercial paper

On 11 September 2024, the use case team consisting of the federal state of Saxony-Anhalt, represented by the ministry of finance, the market participants NatWest Markets N.V. and DekaBank as well as the market DLT operator Clearstream Banking AG explored the issuance of a digital commercial paper using the Bundesbank’s Trigger Solution for the cash settlement of the transactions. The state of Saxony-Anhalt was the issuer of the paper under the German Electronic Securities Act (eWpG). NatWest acted as dealer in the issuance process. The Bundesbank, as the house bank for public administrations, provided the underlying RTGS account for Saxony-Anhalt for the cash settlement of the transaction. DekaBank acted as investor. The paper was issued on the D7 platform of Deutsche Börse that with Clearstream Banking AG also took over the roles of registrar and transaction manager. With the trial, for the first time a real commercial paper from a public authority was issued via the Trigger Solution. The underlying transactions led directly to real and final bookings in the production systems of the parties involved and in TARGET, the Eurosystem’s payment system.

Trial: Issuance of a digital corporate bond

On 3 September, the use case team DekaBank, Deutsche Bank, BayernLB, DZ BANK, Helaba and LBBW together with their technology partner SWIAT explored the issuance of a digital corporate bond using the Trigger Solution for the cash settlement of the primary distribution. The bearer bond under the German Electronic Securities Act (eWpG) was issued by Siemens. BayernLB, DekaBank, DZ BANK, Helaba and LBBW were the investors. DekaBank also took over the roles of registrar and market DLT operator. Deutsche Bank ensured settlement for Siemens in central bank money via the Trigger Solution. The bond was issued same-day on the blockchain network of the technology provider SWIAT. The use case was conducted as a trial, thus meaning the issuance of a real corporate bond which resulted in real and final bookings in TARGET, the Eurosystem’s payment system, by using the Trigger Solution.

Trial: Issuance of a digital bond

On 28 August 2024, the use case team consisting of KfW, DZ BANK, Cashlink Technologies, DekaBank and Union Investment issued a digital bearer bond using the Trigger Solution for the cash settlement of the primary distribution. KfW issued the digital bearer bond in the form of a crypto security according to the Electronic Securities Act (eWpG). The bond was issued on the blockchain infrastructure of the Market DLT Operator Cashlink that acted as the crypto securities registrar. With regard to the issuance, DZ BANK took over the roles of bookrunner, collectively registered owner holding the bond issue and the provision of the investors’ custody infrastructure. DekaBank, DZ BANK and Union Investment acted as investors. The custody infrastructure for KfW is provided by Boerse Stuttgart Digital Custody. The exploration was conducted as a trial and thus ultimately resulted in real and final bookings on the cash accounts of the participants in TARGET, the Eurosystem’s payment system.

Trial: Issuance of a digital registered bond

On 18 July 2024, the first trial of a wave 2 use case team with the Deutsche Bundesbank’s Trigger Solution took place. The use case team Bayerische Landesbank, Helaba (Landesbank Hessen-Thüringen) and Stadtsparkasse München explored the cash settlement of the issuance of a digital registered bond by using the Trigger Solution. Helaba acted as cash settlement agent for Stadtsparkasse München as buyer of the digital registered bond. Bayerische Landesbank assumed the roles of the market DLT operator and, on the participant side, of the issuer of the underlying security. The use case team received technical and specialist support from the two technology providers SWIAT, on whose blockchain network and software the registered bond was issued, and NTT DATA.

Trial: Issuance of a digital bearer bond

On 11 July 2024, the use case partners DekaBank Deutsche Girozentrale and Bankhaus Metzler explored the cash settlement of the issuance of a digital bearer bond together with the Trigger Solution. DekaBank assumed the roles of issuer as well as market DLT operator and registrar, while Bankhaus Metzler acted as investor. The bearer bond was issued same-day on the blockchain infrastructure of the use case team’s technology partner SWIAT. The use case was conducted as a trial and thus resulted in real and final bookings on the RTGS accounts of the participating banks in TARGET, the Eurosystem’s payment system, by using the Deutsche Bundesbank’s Trigger Solution.

Experiment: Issuance and primary distribution of a bond

The first experiment with the Trigger Solution was performed on 8 July 2024. BNP Paribas explored the issuance and primary distribution of a bond using its AssetFoundry – Ethereum based – tokenization platform. The experiment took place with mock data in the test environments of the participants. The simulated cash settlement was carried out using the Deutsche Bundesbank’s Trigger Solution which resulted in bookings on the BNP Paribas’ RTGS test accounts in the T2-UTEST environment, the test environment of the Eurosystem’s payments system. For the purpose of this experiment, BNP Paribas played both, the role of the market DLT operator and the role of market participants as issuer and as investor in the simulation.

Trial: Issuance and primary distribution of a commercial paper

On 28 June and 1 July 2024, the first two trials with the Deutsche Bundesbank’s Trigger Solution were successfully settled. The use case comprised the issuance and primary distribution of a commercial paper with the use case team Clearstream Banking Frankfurt AG as market DLT operator with its digital D7-platform and the two market participants DekaBank Deutsche Girozentrale and DZ Bank AG Deutsche Zentral-Genossenschaftsbank. The exploration was conducted as a trial in the participants’ production systems and ultimately resulted in real and final bookings in TARGET, the Eurosystem’s payment system, by using the Deutsche Bundesbank’s Trigger Solution.