Broadridge Says Blockchain Can Improve Repo Market

A pilot with Societe Generale showed the technology reduced risk and boosted efficiency, firm says.

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 and Natixis, 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,”’ 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,” Horacio Barakat, vice president of corporate strategy at Broadridge, said in a phone call Monday. “We envision this as the first step in the road map toward collateral management.”

 

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