Today Broadridge announced its distributed ledger repo (DLR) solution is live. It launched an initial pilot for bilateral repos in 2017 with Natixis and Societe Generale.
Although the company didn’t state which institutions are currently live on the platform, it shared that average daily volumes in the week since launch have been $31 billion. According to SIFMA, the U.S. repo market size in terms of average daily outstanding balances was $4.5 trillion in 2020. It should come as no surprise that Broadridge has quickly managed to achieve some scale as its conventional systems process repo transactions for 19 of the 24 primary dealers.
A typical repo transaction happens when a financial institution borrows cash by selling securities, often treasuries, and agrees to repurchase them at a slightly higher price in the near future. For the cash borrower, it meets a short term cash need, and for the other party, they may be looking to hold a particular type of collateral or security. According to the BIS, nowadays in some markets, demand for specific collateral is often a more significant driver than cash.
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