Broadridge launched its distributed ledger repo (DLR) platform more than two years ago, and UBS was one of the first clients to sign up in 2021. Now Broadridge has added an additional blockchain service to DLR, sponsored repo, which UBS is also using.
Last year we reported that DLR was processing around $1 trillion per month in trades. That’s still small compared to Broadridge’s broader fixed income platform that processes more than $6 trillion daily. Broadridge’s DLR brings efficiency to the repo process and also supports intraday repo trading. Most of the big bank clients use it for trading within the group.
Sponsored repo refers to the ability to centrally clear securities through the FICC, the U.S. central counterparty. Sponsored clearing allows sponsoring members to let their clients use FICC clearing. That avoids every organization that wants to centrally clear needing to comply with all the requirements of becoming a member.
“By digitizing our existing sponsored repo trade flow and incorporating those trade flows into our DLR tech stack on Broadridge’s platform, we can increase efficiencies while reducing the risk of fails and lowering our settlement costs,” said Christian Rasmussen, Head of Investment and Execution, Group Treasury UBS. “We are always looking for innovative ways to reduce operational risks and believe this platform will help us accomplish our goals.”
In the case of UBS, sponsored repo potentially lets other group entities use DLR and FICC for central clearing. For example, 15 funds managed by UBS Asset Management are sponsored FICC members.
“We are empowering leading financial institutions with the ability to dramatically lower risk and operating costs and see enhanced liquidity,” added Horacio Barakat, Head of Digital Innovation at Broadridge.
Meanwhile, today we reported that UBS in Singapore had piloted tokenizing money market funds on the Ethereum blockchain.