Today Broadridge announced the latest progress on the rollout of its Distributed Ledger Repo (DLR) platform, which already racks up a $1 trillion in monthly trades. Trading firm DRW, Societe Generale and an un-named Tier 1 bank have executed intraday repo transactions on DLR. Last month UBS executed the first intraday repo transaction with an Asian bank.
Repurchase agreements (repos) involve the sale of a bond, often a Treasury, and a repurchase at a later date. The net effect is similar to taking out a loan. It’s used as a liquidity management tool.
“Intraday repo allows us added flexibility to manage liquidity and help maximize use of capital, which was previously limited by technological barriers,” said Mark Wendland, COO at DRW.
Until April, the bulk of DLR transactions had been a small number of banks – including UBS and Societe Generale – using repo between intragroup subsidiaries. That enabled the platform to get off the ground and give immediate benefits to users. The latest batch of cross company intraday repos creates a network effect and additional benefits, including settlement flexibility, risk reduction and cost savings.
“By meshing distributed ledger technology with existing market settlement infrastructure, we can help usher in new flexibility for our clients via a secure and compliant channel,” said Greg Zielinski, COO, Societe Generale Americas.
The solution uses Digital Asset’s Daml smart contract language, enabling users to agree, execute, and settle repo transactions.
Meanwhile, DRW has a strong track record in blockchain with its subsidiary Cumberland, a crypto liquidity provider. SocGen subsidiary Societe General FORGE recently launched a Euro-denominated stablecoin targeted at institutions.