Margin and collateral network "MarcoNet"
| Reference number | |
| Coordinator | Envirio Consulting AB |
| Funding from Vinnova | SEK 1 850 529 |
| Project duration | August 2019 - November 2020 |
| Status | Completed |
| Venture | Collaboration projects in cybersecurity and digital infrastructure |
Purpose and goal
Pension schemes have been exempt from the European Market Infrastructure Regulation (EMIR) since 2012. The exempt is being phased out. With that, pension schemes have to provide collateral to safeguard more types of transactions. With today´s infrastructure, it could cost Swedish retirees SEK 2 billion per year, according to the European Commission´s 2015 study. By providing securities as collateral, the cost is lowered for the pension schemes. The project demonstrates a blockchain-based infrastructure that makes it as easy to provide securities or cash as collateral.
Expected results and effects
The concrete result is a working solution on how to improves the process "From a CCP making a margin call until the call is covered ". Margin calls can be handled ad-hoc within minutes and covered with securities or cash. The solution minimises the cost of providing the financial stability that EMIR promises. The economic benefit is gained by institutional investors using more securities and less cash, leading to better returns. The solution is promising as a product candidate.
Planned approach and implementation
The project had three streams: The technology stream was successful in applying blockchain technology and developing a user-friendly interface. The legal challenge that blockchain can entail was managed by an account-based approach rather than tokenisation, meaning it falls within current regulations and can be applied as of today. The business processes are supported in line with market standards as described by SWIFT, ISO and ISDA. Due to circumstances, the pandemic, the project time was extended while maintaining the resource budget.