ABN AMRO is partnering with 21X, which is the first combined trading venue and securities settlement infrastructure to be authorized under the EU’s DLT Pilot Regime. The Dutch bank executed a joint proof of concept for tokenized securities by making a trade on the platform using the Polygon test network.

ABN AMRO used its own wallet solution and will provide custody for clients once it offers them access to the 21X platform when it goes live.

Traditionally, the execution of a securities trade and its settlement are performed by separate infrastructures, and European law requires the involvement of a central securities depository (CSD) for secondary trading. The DLT Pilot Regime provides a legal exception that supports the same authorized platform conducting both tasks.

In this case, an ERC 3643 token (the token standard developed by Tokeny) was listed on the 21X platform. Using 21X’s on-chain order book, the bid and offer were matched, and then settled atomically using an e-money token, a type of stablecoin that complies with the EU’s MiCA regulations. One of the reasons why a CSD is not required is because the simultaneous exchange of cash and securities reduces risks.

Public blockchains typically use automated market makers (AMMs) for the trading leg, which might not be ideal for tokens with less liquidity. We explored 21X’s on-chain central limit order book (CLOB) in an earlier article.

“Following our issuance of tokenized green bonds to professional and institutional investors, and the provision of ABN AMRO digital asset custody and account capabilities, we are now adding secondary market capabilities to our scope through our cooperation with the leading European DLT trading and settlement system,” said Martijn Siebrand, Program Manager, Digital Assets, at ABN AMRO.

Stablecoins for trading venues

Last week 21X announced a strategic partnership with AllUnity, the stablecoin initiative from Deutsche Bank asset manager DWS, Flow Traders and Galaxy Digital. The role of stablecoins on a platform such as 21x is critical. Because the platform combines the trading and settlement, trading pairs don’t quote prices in Euros but in specific Euro stablecoins. For example, if Company ABC has a listed token, its price will likely only be quoted against a single stablecoin brand, such as AllUnity’s coin. This is necessary in order to be able to settle immediately once the trade is matched.

AllUnity is still in the process of getting regulatory approval for the launch of its stablecoin. The collaboration with 21X is not a huge surprise given AllUnity CEO Alexander Höptner is also the Chair of 21X.