Distributed Ledger Technology Sponsored Repo

The Drive Towards Increasing Central Clearing Requirements

The SEC’s move to mandate central clearing for most cash and repo trades represents a big change for the $26 trillion U.S. Treasury market.

Currently, 70 – 80% of Treasury trading volume is uncleared. That means the securities industry has much heavy lifting to do to get ready for what will be a massive shift. 

Dealers will need to build out their operational processes, governance frameworks, and business models so they can centrally clear trillions of dollars of eligible U.S. Treasury activity.

Most buy-side firms will comply with the new regulations for centrally clearing repo trades through the Fixed Income Clearing Corporation’s (FICC) Sponsored Service. That means dealers should anticipate large increases in sponsored repo volumes, which they’ll need to manage. They’ll also experience the associated increase in clearance and settlement costs. Firms will covet a scalable and efficient solution to simplify their post-trade workflows when it comes to complying with this regulation.

Bring Simplification and Efficiency to Your Operations Teams

Harnessing the power of distributed ledger technology (DLT) and smart contracts, Broadridge is providing clients with new capabilities for sponsored repo trade flows. Firms can anticipate:

• A reduction in settlement cost
• Streamlined processes
• Enhanced scalability
• A marked decrease in operational risks

Broadridge’s Sponsored Repo solution enables firms to comply with the recent SEC mandate by providing a sleek way to leverage the FICC’s Sponsor Membership Service.

Build Out

Broadridge’s DLT-based solution allows dealers to develop a Sponsor Membership Program capability using next-generation technology while meeting SEC compliance deadlines.

Scale Up

Our sponsored repo solution can help dealers grow their current sponsored repo business while realizing efficiency gains, cost savings, and risk reduction.

The DLT Advantage

• Scale to meet the expected volume increases in sponsored repo
• Fast track entering sponsored repo for dealers to meet the SEC’s deadline
• Fewer collateral movements
• Reduce clearing costs via DLT-tracked workflow optimization and real-time position management
• Improve collateral management and velocity to reduce both DLOD and TMPG payable