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Global Investment Bank Reinvents Intracompany Repo Trades With DLR

A Distributed Ledger Repo case study.

DIGITALISES DELIVERY OF COLLATERAL BETWEEN BANKING ENTITIES

With Broadridge’s Distributed Ledger Repo (DLR) platform, the bank has digitalised its repo trade collateral, thus simplifying and accelerating the settlement process.


REDUCES THE OPERATIONAL COST AND RISK OF INTRACOMPANY TRADES

By digitalising post-trade repo workflows, the bank gains operational efficiencies as well as reduces settlement costs.


REDUCES POTENTIAL FOR ERRORS AND TRADE FAILS

The DLR platform automatically ensures that the bank’s trade details are accurate, helping to decrease operational errors, fails, and costly penalty charges.


INCREASES CASH MANAGEMENT TRANSPARENCY

DLR provides a single source of truth for the bank’s real-time repo trade commitments, boosting the it's liquidity.

DLT REPO: A SOLUTION WHOSE TIME HAS COME

The promise of blockchain and distributed ledger technology (DLT) has captivated the financial services industry for years, with many companies questioning how to efficiently leverage the technologies. The investment bank has found an answer with Broadridge’s Distributed Ledger Repo (DLR) platform.

The global investment bank and financial services company was one of the first two companies piloting the cutting-edge platform in 2017. The success of that effort spurred the bank to expand DLR across its intracompany repurchase, or repo, trading operation in Q1 of 2022.
The innovative solution uses DLT to provide a secure record of repo trade details, which reduces the need for reconciliation, automates processes, and streamlines repo agreement and confirmation. With this technology in place, the bank is on track to save millions in intracompany trading transaction fees, reduce trading errors that eat up staff time and lead to costly penalties, increase auditability, and improve visibility into the cash management of all its legal entities.

REPO THAT NEEDED REVAMPING

The traditional intracompany repo trade process is particularly complicated. Prior to the bank launching DLR, each intracompany repo trade involved multiple parties, complex workflows, and manual reconciliations. The global company executes tens of thousands of them daily, incurring significant costs each year.

What’s more, the process was laborious — the manual effort is not only inefficient but could lead to errors.

Lastly, the siloed approach creates barriers to visibility. The European financial services leader increased visibility into its cash positions can lead to more strategic allocations in real time.

BLOCKCHAIN’S REPO PROMISE REALISED

The bank still books intracompany repo trades via Broadridge’s fixed-income trade processing solution. However, the DLR application now sits between the company and the fixed income platform. The DLR trading solution eliminates the need to exchange the underlying securities in the repo transactions. Instead, the platform transfers ownership between entities using smart contracts.

The entire process allows the bank's entities to agree, settle, and execute their repo transactions in one place. It also provides a single view of the entire lifecycle of transactions for everyone involved. And the automated matching and settlement flags eliminate potential discrepancies that would typically lead to failed trades.

THE REPO TRADE RESULTS

With its new DLR infrastructure, the bank has reinvented how it conducts intracompany repo trading. The blockchain technology has helped the company reduce the operational cost and risk of each transaction. With Broadridge’s DLR solution, the global financial services company stands to:

  • Save $2-3 million in transaction costs each year
  • Reduce trade fails and errors that cost staff time and incur penalties
  • Improve its liquidity with real-time visibility into its cash positions
  • Streamline and simplify the intraday repo trading process

With its new DLR infrastructure, the bank has reinvented how it conducts intracompany repo trading and reduced the operational cost and risk of each transaction.


The benefits provided by Broadridge DLR make the technology investment more than worth it. In the process, the bank has helped usher in a new era of blockchain technology that will set the standard for intracompany and bilateral repo trades going forward.

Core Benefits

  • Increased operational efficiency with a seamless end-to-end process that eliminates manual work
  • Fewer collateral moves, which reduce settlement and transaction costs
  • Minimised risk due to the simultaneous settlement of assets and immobilised collateral
  • Full transparency that helps improve liquidity

For more information, please visit

BROADRIDGE.COM/DLR

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