Simon Seiter, Head of Digital Assets at Deutsche Börse, spoke on a panel at the European Blockchain Convention about disintermediation and blockchain.

The impulse to disintermediate, according to Seiter, is a rational one. “Ultimately, you’ll only achieve efficiency once you get to the level of bilateral transactions,” he said.

On the other hand, the businesses wanted to know who would provide the price, which an intermediary had previously handled.

“There will always be services that are valuable, and these can include things like access to liquidity pools, the provision of reference data, pricing, efficient matching algorithms, and other things like that,” Seiter said.

Current services will need to develop and be provided in a distributed, world-friendly manner. One of the primary services offered by the Deutsche Börse is a central security depository (CSD).

This is still a legal requirement in Europe for shares, although it is likely to change.

With the HQLAX initiative, the stock exchange has already shown one form of evolution. HQLAX allows banks to exchange collateral baskets without transferring the underlying securities, which remain with the original custodian.

The Trusted Third Party service from the Deutsche Börse sits between the custodians and the digital collateral registry.

Seiter sees more opportunities for this type of thing in the future. “Right now, we have this business link. And I believe it would be beneficial to all if we could expand on that in the crypto world,” he said.

Digital Asset’s Darko Pilav differentiated between two forms of intermediaries. Those that have value-added services aren’t going anywhere anytime soon.

Also, others benefit from inefficiencies. These profits will vanish until blockchain eliminates inefficiencies.

Guardianship is the Key

When it comes to the future of digital assets, Seiter made it clear that the stock exchange wants to link to both public and private blockchain networks and their network.

And he sees custody as more than just key management; it also provides access.

“An asset that resides on a public or allowed chain may only exist on this chain. “You won’t be able to get it off (the chain),” he said. However, you have control over the custody function.

“We have to handle these positions by linking to the chains where these assets are currently residing through a dedicated custody function if we want managed positions on our networks, either within the existing accounting systems or otherwise in the network we’re developing on our own.”

Other ventures publicly addressed by the Deutsche Börse include its investment in FundsDLT through its Clearstream post-trade subsidiary, in addition to HQLAX.

The Luxembourg Stock Exchange founded FundsDLT, a blockchain-based network that connects the mutual fund world by exchanging data between asset managers, distributors, and client investors.

In a recent trial with the Deutsche Bundesbank, Deutsche Börse resolved a securities deal atomically using cash on the ledger.

The solution was designed to work in conjunction with the current Target-2 settlement scheme