Broadridge Financial Solutions, Inc., a global fintech leader, announced today that UBS, the world’s largest private bank, has joined its distributed ledger repo (DLR) platform.
What Broadridge Has to Offer
Broadridge is a global fintech leader that provides technological solutions to banks, mutual funds, and other corporate issuers. Through the use of smart contracts, their DLR platform enables banks and other market participants to execute and settle repo transactions.
These smart contracts transfer ownership of securities between buyers and lenders automatically and record the transactions on a distributed ledger. When compared to traditional methods, this reduces both the operating costs and the counterparty risk of all repo activity.
Paul Chiappetta, Americas Chief Operating Officer of Group Treasury at UBS AG, expressed enthusiasm for what DLR will bring to the company:
“We look forward to the increased liquidity and risk reduction that Broadridge’s distributed ledger repo platform will provide (…) This collaboration strengthens our overall digital strategy by leveraging new technologies aimed at reducing risk and improving efficiencies in financial markets.”
The addition of UBS to DLR is a huge boost to its expanding network, which has already executed over $35B in average daily volume in its first week of operation. Because the bank has historically approached the entire space with caution, their adoption of blockchain technology may provide encouragement to the crypto community.
What Exactly Is a Repo?
Repo is an abbreviation for “repurchase agreement,” which is a short-term agreement to sell and then repurchase government-backed securities at a slightly higher price – essentially a short-term loan.
These agreements usually involve banks, which are required to keep a certain amount of liquidity on hand during the overnight hours. When they require liquidity, repos allow them to obtain it while making a profit for buyers, or “lenders.”
Broadridge’s President of Capital Markets, Vijay Mayadas, knows that UBS will benefit from the ability to exchange repos using their distributed ledger technology, which will bring the entire industry “enhanced liquidity, risk reduction, and operational efficiencies.”