GSK Stockmann advises on first true blockchain securities transaction
Frankfurt a. M. — In mid-January 2019, GSK Stockmann advised on the first securities issue in Germany originally executed as a blockchain transaction. Commerzbank AG, Continental AG and Siemens AG were involved in the transaction.
Continental AG as issuer, Commerzbank AG as blockchain operator, e‑money issuer and arranger, and Siemens AG as investor have for the first time in Germany settled a money market security between companies as a blockchain transaction in a pilot project. The euro-denominated commercial papers (“DLT-ECP”) with a volume of EUR 100,000 and a maturity of three days were issued digitally under Luxembourg law and electronically signed, sold and settled.
This was the first time that the money side of such a transaction was also processed directly on the blockchain using e‑money. Commerzbank AG’s research and development unit, the Main Incubator, has provided the Corda-based blockchain platform for this purpose. This DLT-ECP transaction is an important step towards the technical scaling of automated securities issuance.
This is the first time that a money market securities transaction has been completely dematerialized and still settled in a legally binding manner. This made the transaction much faster and more efficient than before. This was made possible, among other things, by a security fully mapped in the blockchain. The euro purchase price amount with which the money market security was acquired was previously converted into e‑money in order to also be able to settle the payment exclusively on the blockchain. With the help of blockchain technology, all claims could thus be mapped in a digitally and legally binding manner. This also enabled immediate value delivery and settlement in real time.
In order to map the trading of the security immediately and digitally in a move-for-move transaction (so-called “delivery vs. payment”), the tenure-based e‑money was made available digitally via the blockchain so that companies could immediately trade security for e‑money. The documentation and money exchange could thus be completed in minutes instead of days — without a bank as an intermediary.
GSK Stockmann advised on this innovative transaction on a cross-location and cross-border basis. The transaction was managed by the Frankfurt capital markets legal team led by Peter Scherer. The Munich office played a leading role in the e‑money legal side of the transaction. The Luxembourg office of GSK Stockmann was closely involved in the creation of the digital security under Luxembourg law.
GSK Stockmann’s expertise in securities trading on the blockchain and in e‑money issues, as well as its location in Luxembourg, enabled the firm to successfully advise on all legal aspects of this extremely innovative transaction.
Advisors to Commerzbank AG, Continental AG and Siemens AG: GSK Stockmann
Peter Scherer (†, Lead), Dr. Timo Bernau, Andreas Heinzmann, Dr. Markus Escher (all Banking and Capital Markets, Financial Regulatory); Associates: Dr. Johannes Blassl, Valerio Scollo and Franzisca Stuckenberg (all Banking and Capital Markets, Financial Regulatory).