Today Singapore’s DBS Bank announced it had executed its first intraday repo transaction using JP Morgan’s Onyx Digital Assets network powered by blockchain. Banks use repurchase agreements (repos) for short term funding by selling securities such as U.S. Treasuries, and agreeing to repurchase them later.
Repos are a massive market with more than $4 trillion in U.S. dollar repos outstanding at any one time.
Since repos are intended for short term funding, the drawback is that settlement usually takes two days. Distributed ledger technology (DLT), with its instant settlement or delivery versus payment (DvP), makes it practical to have repo transactions that span a few hours rather than a day or more. Blockchain is powering other types of intraday funding, including swaps.
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