Securities depository giant Clearstream has announced it is investing in Munich-based fintech Digital Vault Services (DVS), unveiling plans to expand its issuance and safekeeping services to digital bank guarantees. 

Clearstream, which is part of the Deutsche Börse Group, will take a minority stake in DVS, subject to regulatory approvals and finalisation of legal documentation. It expects to complete the transaction in the second half of this year, the company announced today. 

Clearstream currently operates Germany and Luxembourg’s central securities depositories and has €18tn in assets under custody. Its post-trade platform D7 offers a digital alternative to physical issuance and management of securities. 

The investment will see DVS’s guarantee vault – which allows corporates to issue and store bank guarantees digitally – integrated within the D7 platform, expanding Clearstream’s digital asset portfolio to non-securities for the first time. 

Jens Hachmeister, head of issuer services and new digital markets at Clearstream, says: “We are convinced that DVS’s innovative approach to digital bank guarantees, combined with D7’s track record in digitising securities and Clearstream’s central role in global financial markets, will drive significant growth and deliver value for our clients and ultimately the entire financial industry.” 

Jaime Gimeno, co-chief executive of DVS, tells GTR the partnership “represents a major milestone for DVS”. 

“The planned integration between our Guarantee Vault solution and the D7 platform will enable DVS to leverage Clearstream infrastructure to offer corporates and financial institutions in the trade finance space a new level of comfort in digital guarantees and our safekeeping services,” he says. 

Co-chief executive Ludger Janssen adds that in the two years since launching, DVS has more than 30 guarantors active on its platform and has facilitated the issuance of guarantees to thousands of beneficiaries. 

“This partnership with Clearstream will help accelerate our growth as we grow geographically,” he tells GTR. 

In a joint announcement, the two companies say financial markets are currently “highly fragmented”, with technology solutions remaining “isolated”. As a result, market participants face slow processes, high error rates and additional costs. 

“Digital solutions aim to counter these problems by connecting networks and market players across system boundaries, thereby boosting transparency, process efficiency and technology interoperability,” they say. 

DVS’s Gimeno adds the company initially took inspiration from the central depository model used in the securities industry, and expects the partnership with Clearstream to support its ambition to become “the recognised market infrastructure solution for guarantees in Europe”.