HQLAᵡ, the distributed ledger-based tokenization platform, has executed its first agency securities lending transaction between BNY Mellon and Goldman Sachs, both investors in the company. The 35-day term transaction was for hundreds of millions of dollars.
The primary purpose of HQLAᵡ is to save money for big banks that have to keep high quality liquid assets (HQLA) for Basel III balance sheet compliance. To date, the platform has allowed banks to swap HQLA between each other to get the right mix of assets on a delivery versus delivery basis. Today’s news is it is also enabling agency securities lending.
The challenge is that trading assets has long settlement times as the securities are moved between different custodians.
Instead, HQLAᵡ tokenizes the securities held at the original custodian enabling the asset to be traded and settled, without moving it. It relies on the Deutsche Börse acting as a trusted third party between the custodians and the digital collateral registry – the...
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