The Swiss Bank will be utilizing the blockchain platform in the interest of “enhanced liquidity and reduction of risk”.
Global fintech leader Broadridge Financial Solutions, Inc. announced today that UBS – the world’s largest private bank – has now joined its distributed ledger repo (DLR) platform.
What Broadridge Offers
Broadridge is a corporate services company and global fintech leader that provides technological solutions for banks, mutual funds, and other corporate issuers. Their DLR platform allows banks and other market participants to execute and settle repo transactions by utilizing smart contracts.
These smart contracts automatically transfer the ownership of securities between buyers and lenders and record the transactions on a distributed ledger. This reduces both the operating costs and counterparty risk of all repo activity, compared to traditional methods.
Americas Chief Operating Officer of Group Treasury at UBS AG, Paul Chiappetta, expressed enthusiasm for what DLR will offer the company:
“We look forward to the enhanced liquidity and reduction of risk that Broadridge’s distributed ledger repo platform provides (…)This partnership reinforces our overall digital strategy, leveraging new technologies aimed at reducing risk and improving efficiencies in the financial markets.”
The addition of UBS to DLR comes as a massive boon to its expanding network, which already executed over $35B in average daily volume within its first week since launch. Their adoption of blockchain technology may bring encouragement to the crypto community, as the bank has historically approached the entire space with caution.
What Is a Repo?
Repo is short for “repurchase agreement”, a short-term agreement to sell, and then repurchase government-backed securities at a slightly higher price – effectively a short-term loan.
These agreements typically involve banks, which are required to maintain a certain amount of liquidity during the overnight hours. When in need, repos allow them to obtain that liquidity while providing a profit for buyers, or “lenders”.
Vijay Mayadas, President of Capital Markets at Broadridge, knows that UBS will benefit from the ability to exchange repos using their distributed ledger technology, which will bring “enhanced liquidity, reduction of risk and operational efficiencies” to the entire industry.