Broadridge, Fnality Partner for Instant Repo Settlement with DLT Solution

Broadridge has successfully integrated its Distributed Ledger Repo (DLR) solution with Fnality’s tokenized payment platform, demonstrating for the first time the settlement of intraday repurchase agreements using delivery versus payment with central bank money. This collaboration marks a significant step in advancing institutional blockchain solutions for financial markets.

Fnality, which is backed by 20 global financial institutions, has recently applied for a US banking license following its successful launch in the UK. The company provides tokenized settlement systems for institutions, with shared tokens backed by central bank reserves.

Repurchase agreements (repos) allow holders of high-quality assets like Treasuries to temporarily exchange them for cash to meet short-term needs. The transaction is typically reversed shortly afterward, often overnight, with the cash provider earning interest while being protected by temporarily owning the high-quality collateral.

“The move towards instantaneous settlement will be pivotal in strengthening the financial sector’s growth and global competitiveness,” said Michelle Neal, CEO of Fnality International. “Fnality and Broadridge are at the forefront of this evolution, providing the critical infrastructure needed to support accelerated settlement and unlock new efficiencies across global financial markets.”

DLR’s Expanding Use Cases

The DLR platform currently serves two major functions. First, it supports repo transactions across various terms, including intraday repos that benefit from instant collateral ownership transfers. Second, it facilitates sponsored repo, where larger institutions provide clearing access to smaller entities like brokers and hedge funds through the Fixed Income Clearing Corporation (FICC).

Beyond repos, DLR’s core functionality involves tokenizing conventional Treasuries. This capability is increasingly valuable for transferring ownership between separate entities within the same group and for using tokenized collateral to meet margin requirements instead of cash.

The Commodity Futures Trading Commission (CFTC) has initiated pilots to explore the potential of digital collateral for instant margin calls, further validating the approach.

Market Changes Favor DLR Technology

New SEC rules requiring central clearing for Treasury cash market transactions and repo operations are expected to create additional opportunities for DLR. While the SEC has delayed implementation deadlines, these changes will eventually restructure the market.

With CME and ICE planning to launch Treasury clearing services alongside DTCC’s FICC, the clearing landscape is becoming more fragmented. This fragmentation may require institutions to post margin at multiple clearing venues, increasing the value of technologies that can instantly move collateral.

Broadridge’s DLR platform stands to gain from these changes in two ways: by facilitating the rapid movement of collateral between venues and by supporting the increased demand for intraday repo transactions, which are excluded from central clearing requirements.

This integration with Fnality also represents Broadridge’s first step toward expanding its DLR platform into European markets, complementing its existing integration with JPM’s Kinexys Digital Payments (formerly JPM Coin).

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