Forging a digitally empowered financial ecosystem: Euroclear’s vision for the future

Redefining the financial market infrastructure: our transformative roadmap

In the fast-paced world of finance, Euroclear is embarking on a transformative journey. Traditionally known for our expertise in post-trade services, we are redefining our role as a Data and Digital-Enabled Financial Market Infrastructure – a vision we refer to as ‘D²FMI’.

At the core of this strategic shift lies Euroclear’s ambition to leverage data and cutting-edge technologies to reshape the existing market model. By transitioning from a sequential value chain to an open, collaborative platform, we aim to co-create innovative data-driven solutions with our clients, fintech partners and other industry players.

Unlocking new frontiers of growth and efficiency

The implications of the Euroclear D²FMI initiative are far-reaching, promising significant benefits for our clients and the broader financial ecosystem.

From reducing operational costs and risks to unlocking capital for new business opportunities, our data-driven approach is set to drive increased efficiency, expanded reach and greater value creation. Our objective is to craft solutions that address the evolving needs of our customers and catalyse industry advancements. This includes empowering clients to optimise their balance sheets through tokenisation - opening up new avenues for growth and innovation.

Tokenisation of illiquid assets: a transformative opportunity

One of the key focus areas for Euroclear’s D²FMI initiative is the tokenisation of global illiquid assets, a market opportunity projected to reach a staggering USD 16 trillion by 2030¹. By representing physical assets or digital rights on a blockchain, tokenisation has the potential to unlock liquidity and create new investment channels across a wide range of hard-to-access assets, from real estate to private equity. However, the journey towards widespread institutional adoption of tokenised assets has been fragmented, with firms often working in silos and struggling to drive broader ecosystem development. As a leading FMI, Euroclear is poised to play a pivotal role in bridging the gap between digital asset securities and the conventional financial landscape.

Pioneering distributed ledger technology (DLT) initiatives

Recognising the transformative potential of DLT, we have been actively engaged in exploring and implementing this technology. Over the years, we’ve participated in various DLT projects with market partners, and have recently launched our own DLT platform - D-FMI - with an initial module for digital securities issuance. One notable milestone is the World Bank’s utilisation of the D-FMI platform to issue Digital Native notes, supporting the financing of sustainable development initiatives. More recently, the Asian Infrastructure Investment Bank (AIIB) successfully issued its first digitally native note on our D-FMI platform, and we anticipate a growing number of issuers leveraging this platform in the future. Furthermore, we recently collaborated with DTCC² and Clearstream, with the support of the Boston Consulting Group (BCG), on a comprehensive whitepaper outlining a blueprint for an industry-wide digital asset ecosystem. The Digital Asset Securities Control Principles (DASCP) introduced in the paper aim to address regulatory compliance and mitigate operational risks, paving the way for the wider adoption of tokenised assets.

Embracing DLT: pragmatism and purpose

While Euroclear recognises the transformative potential of DLT, we cannot emphasise enough the importance of taking a pragmatic approach. DLT is a powerful technology, but it’s not a one-size-fits-all solution. We need to embrace it for the right purpose and in the right context.

As an FMI, Euroclear’s role is to guide our clients and partners in navigating the complexities of the evolving digital landscape. By providing innovative solutions and a collaborative platform, we aim to help our clients unlock the full potential of DLT and other emerging technologies.

Fostering a culture of collaboration and client-centricity

Realising Euroclear’s vision of a data and digital- enabled FMI requires more than just technological advancements. Bringing our D²FMI vision to life requires the collective efforts of our clients, partners and our own talented team. Fostering a mindset of collaboration, innovation and client-centricity among our people is crucial to the success of this transformative journey. Euroclear has transitioned from a siloed organisational structure to a more agile, cross-functional model, bringing together diverse expertise to address the evolving needs of our clients. This holistic approach, encompassing areas such as client demand, risk management, resilience and compliance, ensures that we remain responsive and adaptable in the face of industry changes.

Unwavering commitment to innovation and value creation

At Euroclear, our dedication to driving progress, enhancing efficiency and creating value for our clients and the broader industry remains steadfast. In partnership with our clients and the market, we will continue to help shape the future of the global financial ecosystem.

Euroclear’s transformation into a leading Data and Digital-Enabled FMI is a complex undertaking, yet the destination promises a future where financial services are more integrated, efficient and responsive to the needs of an increasingly dynamic world.

¹ Boston Consulting Group (BCG) 2022 report
² Depository Trust & Clearing Corporation

Bernard Ferran, Chief Commercial Officer, Euroclear