The securities lending platform EquiLend has launched its DLT platform, 1Source, with Bank of New York Mellon (BNY) and the National Bank of Canada (NBC) processing the first transactions. With EquiLend supporting more than $4 trillion in notional transactions monthly, the post-trade platform has massive potential for scale.
The key question for any DLT implementation is what problem does it solve? The answer is reconciliation. When one institution lends a stock to another, they agree terms which were logged on the EquiLend platform for years without any issues. The challenge arises with changes.
The rates for a securities lending contract often fluctuate, and sometimes securities have to be reallocated or returned because the underlying stock is sold. Every change is logged separately by each party on their internal systems, often leading to mismatches. These can result in trade breaks, which are especially challenging now that settlement has moved to T+1. So the DLT solution aims to provide a so-called golden record of transaction changes.
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