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Broadridge Pilots Blockchain for Repo Trades With French Banks
The investor services firm worked with Natixis and Societe Generale on the pilot, which was based on the Hyperledger Fabric codebase.
Broadridge Financial Solutions has completed a blockchain pilot with two French banks aimed at recording the details of bilateral repurchase, or repo, agreements.
The U.S.-based investor services firm worked with Natixis and Societe Generale on the pilot, which Broadridge said had demonstrated a distributed ledger's benefits for this kind of transaction. Specifically, those benefits include less manual intervention, reduced risk, greater transparency and faster processing, Broadridge said.
STORY CONTINUES BELOW
"Within the bilateral repo market, blockchain has shown that it can play an instrumental role in reducing operational cost and complexity," Vijay Mayadas, president of global fixed income and analytics at Broadridge, said in a statement.
The company said that a private blockchain was used, based on the Hyperledger Fabric 1.0 codebase.
Repos are a form of secured short-term financing in which the borrower, typically a brokerage firm, sells securities (usually government bonds) to an investors and agrees to buy them back at a specified date and price. In bilateral repos, the parties are responsible for settling the transaction, rather than relying on a central counterparty.
While that may sound arcane, the market for repos is a significant one, with a notional amount outstanding of $2.3 trillion, according to the Securities Industry and Financial Markets Association. And Broadridge indicated it plans to do more with the technology in this area.
The trial's success "lays the foundation for the development of broader collateral management solutions on blockchain," said Jerry Friedhoff, head of Broadridge’s securities finance and collateral management group.
Broadridge has been actively testing out other use cases for blockchains in financial markets.
Earlier this year, the company took part in a blockchain pilot focused on proxy voting, in partnership with JPMorgan Chase, Northern Trust and Banco Santander. That test used a private version of ethereum as a basis.
Image via Shutterstock
Marc Hochstein
As Deputy Editor-in-Chief for Features, Opinion, Ethics and Standards, Marc oversees CoinDesk's long-form content, sets editorial policies and acts as the ombudsman for our industry-leading newsroom. He is also spearheading our nascent coverage of prediction markets and helps compile The Node, our daily email newsletter rounding up the biggest stories in crypto. From November 2022 to June 2024 Marc was the Executive Editor of Consensus, CoinDesk's flagship annual event. He joined CoinDesk in 2017 as a managing editor and has steadily added responsibilities over the years. Marc is a veteran journalist with more than 25 years' experience, including 17 years at the trade publication American Banker, the last three as editor-in-chief, where he was responsible for some of the earliest mainstream news coverage of cryptocurrency and blockchain technology. DISCLOSURE: Marc holds BTC above CoinDesk's disclosure threshold of $1,000; marginal amounts of ETH, SOL, XMR, ZEC, MATIC and EGIRL; an Urbit planet (~fodrex-malmev); two ENS domain names (MarcHochstein.eth and MarcusHNYC.eth); and NFTs from the Oekaki (pictured), Lil Skribblers, SSRWives, and Gwar collections.
