tl;dr
Financial technology consultancy Broadridge manages $50 billion daily in repurchase agreements through its permission-only DLR platform, while Europe-focused securities finance firm HQLAx claims its platform can save banks up to 100 million euros annually. These private blockchain loops are used by ...
Financial technology consultancy Broadridge manages $50 billion daily in repurchase agreements through its permission-only DLR platform, while Europe-focused securities finance firm HQLAx claims its platform can save banks up to 100 million euros annually. These private blockchain loops are used by major banks and institutions for securities financing, with Broadridge's DLR handling significant volume and being used by prominent financial entities. Cross-chain interoperability and integration of bank-grade cash settlement tokens are being developed by these platforms. Such initiatives are seen to have the potential to significantly improve existing processes, though challenges such as regulatory changes and risk aversion remain.
Tokenization enthusiasts in both crypto and traditional finance might be surprised to hear that well over $1.5 trillion worth of repurchase agreements and other forms of securities financing are executed monthly using private blockchains. While this is a sliver of a highly fragmented, multitrillion-dollar market, these private blockchain loops are being employed at a decent scale by many of the world’s biggest banks and institutions, easily dwarfing the much-hyped tokenization of real-world assets (RWA) associated with open chains like Ethereum. Indeed, it could be argued these permission-based, under-the-radar repo ledgers are some of the most successful applications of blockchain technology in existence because repo – where cash is borrowed against securities, often highly liquid Treasuries, with an agreed buy-back date and price – is the lifeblood of funding in capital markets.
Wall Street titans like JPMorgan and Goldman Sachs are reluctant to share specific data when it comes to areas like repo trading. JPMorgan reportedly processes up to $2 billion of transactions a day on its Onyx blockchain, which allows its clients to “settle repo transactions worth billions of dollars within minutes, using smart contracts to tokenize and deliver cash and collateral on a single ledger.” There’s more visibility into the hundreds of billions in live repo transactions some of the systemically important banks are aggregating on tech consultancy Broadridge’s Distributed Ledger Repo (DLR) platform, which handles $50 billion in repo volume a day and is used by the likes of Societe Generale, UBS, HSBC, and Chicago-based trading giant DRW.
As well as clocking up significant volume, these platforms are also building cross-chain interoperability and integrating bank-grade cash settlement tokens. Last week, HQLAx, which is built using R3’s enterprise-grade Corda ledger and includes HSBC, BNY Mellon, and Goldman on its platform, completed a delivery versus payment (DvP) repo settlement with London-based startup Fnality, a provider of institutional-grade digital cash built on a permissioned version of Ethereum. Last month, Broadridge’s DLR, built using Canton Protocol, a smart-contract ledger created by Digital Asset, became interoperable with JPMorgan’s JPM Coin, which also runs on a privacy-focused fork of Ethereum. DLR is also used Commerzbank, with more banks soon to be named.
To those involved in securities financing, blockchain has always looked like a killer application. An “incredible spaghetti mess” is how HQLAx CEO Guido Stroemer describes the vast tangle of securities that need to be physically moved around so big banks can meet their collateral obligations. This complexity leads to banks buying expensive excess collateral buffers, dealing with occasional settlement failures and time lags that result in intraday counterparty credit exposure. “We believe that relieving those headwinds can save banks between 50 million euros ($54 million) and 100 million euros per year, and we actually think that’s conservative,” Stroemer said in an interview.
Given that tokenization is firmly entrenched in the crypto mindset, it will be interesting to see how these closed loops feed into the public blockchain meets TradFi narrative. Although it primarily flies under the radar, Broadridge’s intraday repo business may have the best product market fit in all of the tokenization space, said Rob Hadick, general partner at VC firm Dragonfly. “These types of on-chain products are going to become the norm for Wall Street," Hadick said in an interview. "That said, it’s unclear how this might translate into any value accrual for public chains and the broader crypto economy. There’s an argument that it could be a ‘gateway drug,’ so-to-speak, but that requires a lot of belief.”
Yes, there could be a transformative scenario where native securities are issued on a public network and settled with open digitized cash, said Broadridge’s Barakat. But, he said, that requires regulatory changes, and there's the natural risk aversion that comes with incorporating new technology, particularly something as disruptive as using a public blockchain for transacting repo. “If you wait for that to happen, then you miss out on a lot
More about Tanzanian Royalty Exploration Corp
Tanzanian Royalty Exploration Corp, Tanzanian Gold Corporation is engaged in the exploration and development of mineral property interests in the United Republic of Tanzania. The company is headquartered in Vancouver, Canada.
ENERGY & TRANSPORTATION
GOLD AND SILVER ORES
Market Cap: 114,261,000
Dividend Yield: 0
Beta: None
50-Day Moving Average: 0.125
200-Day Moving Average: 0.007
Shares Outstanding: 35,892,000
Profit Margin: 1.35
Operating Margin: 2.549
Return on Assets: 0.625
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Stock Analysis: Digital Realty Trust Inc Digital Realty Trust Inc
Digital Realty Trust, Inc. is a real estate investment trust that invests in carrier-neutral data centers and provides colocation and peering services.
Sector
Real Estate & Construction
Industry
Real Estate Investment Trusts
Market Cap
$49,117,200,000
Current Price
$40.98
Dividend Yield
4.88%
Price/Earnings Ratio
3.62
Return on Equity
17.8%
Beta
0.215
Market Cap (intraday)
$5,408,785,000
Enterprise Value
$148.69
Price/Book
3.093
Price/Revenue
-0.028