Today Broadridge announced that UBS has joined its distributed ledger repo (DLR) platform. The blockchain solution was launched in early June and processes on average $35 billion in transactions a day.
DLR is one part of Broadridge’s fixed income platform, which supports $6 trillion in daily volumes and boasts 20 of the 24 primary dealers. According to SIFMA, the U.S. repo market size in terms of average daily outstanding balances was $4.5 trillion in 2020.
“We look forward to the enhanced liquidity and reduction of risk that Broadridge’s distributed ledger repo platform provides,” said Paul Chiappetta, Americas Chief Operating Officer of Group Treasury at UBS.
In a typical repo transaction, treasuries or other securities are sold in exchange for money with an agreement to repurchase later.
DLR enables the agreement, execution and settling of repo transactions on a single ledger. The underlying collateral securities are locked and tokenized, enabling ownership to be transferred using smart contracts. Settlement is made by triggering a payment on conventional payment rails rather than cash on ledger. The transaction is atomic, so payment and ownership transfer are simultaneous, reducing counterparty risk.
Apart from reducing risk, the DLR solution also saves operational costs and improves liquidity. It uses the DAML smart contract language on the VMWare blockchain.
Broadridge emphasized that the DLR supports many types of repos, whether intraday, overnight or term, and it also handles both intracompany and bilateral trades.
It has competition from JP Morgan, which also launched a repo solution on its Onyx blockchain platform, which targets intraday repos. Goldman Sachs joined the network in June.