Broadridge Says Blockchain Can Reduce Risk in Repo Market
Broadridge Says Blockchain Can Reduce Risk in Repo Market
(Bloomberg) -- Broadridge Financial Solutions Inc., a provider of trade processing technology, says it’s bringing blockchain to the repurchase-agreement market.
In a recent pilot with Societe Generale SA and Natixis SA, the firm said it found that distributed-ledger technology can make repo trades more efficient and less risky by providing a secure record of transaction details. Under a repo agreement, one party offers a security as collateral for a cash loan. Securities dealers use repos to finance holdings and increase leverage.
“This new blockchain-enabled solution, which automates end-to-end processes, streamlines the repo agreement and confirmation processes, offers a faster and more accurate collateral substitution process, while eliminating time consuming manual interventions, and reduces counterparty risk while increasing auditability,”’ Lake Success, New York-based Broadridge said in a statement.
Broadridge is one of many financial institutions that have recently experimented with blockchain, the technology behind bitcoin that is used for verifying and recording transactions. JPMorgan Chase & Co. said Monday that it’s testing how it can use blockchain to improve global payments. Earlier this year, the banking giant worked with Broadridge on a blockchain pilot that explored how the technology can make proxy voting more transparent. Broadridge is the biggest U.S. provider of proxy-voting services.
"We don’t envision this just stopping on one type of trade like the bilateral repo," said Horacio Barakat, vice president of corporate strategy at Broadridge, in a phone call Monday. "We envision this as the first step in the road map toward collateral management."
To contact the reporter on this story: Lily Katz in New York at lkatz31@bloomberg.net.
To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Dave Liedtka, Andrew Dunn