Capital markets News

Equilend selects Digital Asset’s DAML for its DLT securities finance solution

equilend digital asset securities lending dlt

Digital Asset’s Daml and Canton smart contract solution is the chosen technology for Equilend’s 1Source, a DLT solution that initially targets securities lending reconciliations.

EquiLend’s platform processes $2.8 trillion in monthly securities lending trades. It’s an industry initiative backed by the likes of Bank of America, BlackRock, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, State Street and others.

The problem that Equilend hopes to address with 1Source is reconciliations because each bank holds a separate copy of the securities lending transaction. The challenge is not so much the initial transaction but keeping changes in sync between the counterparties.

If there are differences in how changes are recorded, it can result in settlement breaks and poor trading decisions. Apart from addressing these issues, the hope is that a shared technology platform might reduce the need to maintain in-house systems for reconciliation, Equilend previously told Ledger Insights.

“EquiLend’s 1Source initiative represents a once-in-a-generation opportunity to propel the industry forward with an innovative new approach to lifecycle management,” said Ken DeGiglio, Chief Information Officer of EquiLend.

A 1Source proof of concept with industry participants was completed at the end of 2022, so the solution is currently in the build phase, with plans to launch by 2024.

The question is whether it will launch in time for the move from T+2 to T+1 settlement that will take place in May 2024. Securities lending slows down settlement. That’s because brokers lend out stock, and if the client decides to sell the stock, the broker has to replace it and deliver the stock for the trade to settle.