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WatersTechnology Interview: Unveiling the Winning Formula

Sell-side Technology Awards; Best Distributed Ledger Technology, Distributed Ledger Repo.

Video Transcript

Victor Anderson: Welcome to the winners interviews of the 2023 Sell- Side Technology Awards. Now, Broadridge won the best distributed- ledger technology in this year's awards thanks to its DLR or Distributed Ledger Repo offering.

Now I'm joined by Broadridge's, Horatio Barakat. Welcome, Horatio. Good to see you. Thanks for spending a bit of time with me today. Congratulations to you and of course to Broadridge for this win.

Horatio Barakat: Oh, thank you very much for having me and certainly very, very proud about the win.

Victor Anderson: Good, good, good. Okay, so as I mentioned a few moments ago, Broadridge's DLR platform was responsible for delivering the win for the firm in this year's SST Awards. What I want to know from you, Horatio, is what is the premise of the platform and what specific problems does it solve for its sell- side users?

Horatio Barakat: Yeah. Our dealer platform is basically transforming the repo market infrastructure. That is the goal that we had two, three years when we started developing the platform.

And we always believe that by digitizing the repo process front to back, all the way from execution, all the way through settlement, the platform provides many, many benefits.

And we can boil it down to basically three key categories. Number one, it is basically increasing settlement velocity and even more so creating settlement cycle flexibility so that the counterparties can sell the transactions at the time and where they need it or where they agree to do it.

So that flexibility is critical now that we're thinking about T1 and T0, that flexibility more so than settlement timing to the counterparties. They can agree to whatever they want to agree.

Number two, it increases collateral mobility. By digitally representing the collateral on the platform, counterparties can basically use collateral much more efficiently and use it when and where they need it.

And lastly, it reduces operational cost of the entire process by reducing reconciliation, reducing the potential for fails and actually reducing settlement costs.

So those are the three key main benefits that the platform is bringing to our clients.

Victor Anderson: Yep, yep, yep. Good. Okay. My next question to you then, Horatio, is the DLR platform is certainly not by any means the only repo platform occurring in the marketplace right now, but it is kind of underpinned by distributed edge of technology, et cetera.

So what I want to know from you is how does it differentiate itself from other similar platforms in the marketplace? What are the functions that you believe makes the DLR platform unique in the market?

Horatio Barakat: I think there's two key differentiated factors. One, it is around the technology use and the other one is about how the platform interacts with existing market infrastructure.

So tackling number one, basically the key differentiator is our broad use of smart contract technology. This is a key feature of the platform that allows for the mutualization of the workflows between the counterparties, ensuring that they're always, always in sync and bring significant efficiencies to the overall repo market.

It also provides us the flexibility to tackle many other use cases beyond the specific of the repo market. Think about it as a smart contract library of use cases that can follow whatever type of transactional clients wants us to tackle.

That is one of the key differentiating factors, the smart contract technology. On number two, which is more about how the platform is implemented, the platform basically combines new innovative technology like smart contracts and digitization with existing market infrastructure.

That's what makes it very easy to adopt and very easy to implement, reducing significantly the risk of adoption. Basically, think about the platform sitting on top of existing market infrastructure, leveraging existing depository infrastructure, leveraging existing payment rails.

And the platform operates within existing regulatory frameworks, so it doesn't require the change of regulatory structure. So those are the two key differentiating factors. One is functionality, smart contracts, and the other one, it is leveraging existing market infrastructure, which reduces the risk and increases the possibility for adoption.

Victor Anderson: Good. Horatio, final question that I want to put to you is let's cast our minds forward a year or 18 months and look at the features and functions that Broadridge is now looking at developing and drip feeding into the platform at some point in the future.

What are those functions that Broadridge is currently really focused on right now and with a view to adding them to the platform in the possible future?

Horatio Barakat: Yeah. We recently launched our intraday repo functionality, so we're very proud of that. And that particular use case, it is gaining a lot of traction and we believe is going to be a key driver of the development of our network, which is critical for the success of the platform.

This use case basically provides significant benefits as it relates to intraday funding management, reducing the funding cost, which is very, very important, particularly in the current rate environment.

But even beyond that, the flexibility of the smart contract technology basically allows us to follow our clients' needs.

What started as a repo platform now extended beyond it. We already process purchase and sales transactions, collateral upgrades, pledges and borrows.

And as we believe, the flexibility of the platform will continue. We would be looking into the securities lending market, but we basically are following what our clients wants us to tackle because what they believe is going to bring immediate and significant benefits for them.

Victor Anderson: Yeah. Good, good, good. All right, that's a great point to finish our conversation on, Horatio. So that just leads me to thank you and of course to congratulate you again on this win and also to congratulate Broadridge for yet another win in technologies awards.

It's won many categories over the years and it won a number of other categories in this year's SST Awards. So thank you very much for your time.

Congratulations to you and of course to Broadridge for this win.

Horatio Barakat: Yeah. Thank you very much.

Watch our Head of Digital Innovation, Horacio Barakat, unravel the game-changing features behind our Distributed Ledger Repo platform, winner of Best Distributed Ledger Technology at this year’s Waters Technology Sell-Side Technology.

00:00 - Introduction
00:58 - The Benefits of Transforming the Repo Market Infrastructure with a Dealer Platform
02:57 - What Makes the DLR Platform Unique in the Market?

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