On June 14th, 2021, Broadridge Financial Solutions announced the commercial release of its distributed ledger repo (DLR) platform. The Broadridge DLR is a new blockchain-powered platform that will greatly increase efficiency, lower cost, and provide a new revenue stream for Broadridge Financial Solutions in the repo market. The Broadridge DLR is built on the VMware Blockchain platform, running Digital Asset (DA) Digital Asset Modeling Language (Daml) smart contract language.
A repurchase agreement (repo) is a financial transaction in which one party sells an asset to another party with a promise to repurchase the asset back at a pre-specified later date. Repos can be overnight (a duration of one day) or term (usually a duration of between three months and a year, although some may be up to two years). The repo market enables market participants to provide collateralized loans to one another.
The challenge: repo-market reconciliation is operationally intense and prone to error
Repo transaction processing requires high degrees of manual reconciliation and intervention, creating significant operational overhead and capital usage, due to asynchronous settlement of cash and securities. High market volumes and multiple participants result in fragmentation, fails, and disputes, since there is no single source of truth for the lifecycle of the trade.
Broadridge partnered with Digital Asset (DA) and VMware to create a fully automated end-to-end repo service that supports the simultaneous settlement of cash and securities, removing risk from the process and significantly decreasing capital costs. The DLR platform allows all transaction participants to share one single, real-time view of the entire trade lifecycle with one source of truth that automates repo agreement terms and adheres to market rules. Greater operational efficiency, minimal fails/disputes, and reduced custodial and technology costs combine to save millions of dollars. The combination of ledger-based transaction capabilities, enhanced collateral management, and optimization features will facilitate broad adoption and the transformation of this essential market.
Broadridge leveraged VMware Blockchain and Daml to create its DLR application, modeling the repo process and lifecycle workflows across sellers and buyers — from repo creation to maturity. Benefits include:
- A common data model for assets and workflows
- Automation of complex, multiparty processes
- Efficient code, with the highest level of security and privacy
- Synchronized workflows and simultaneous settlement
- Extensibility to other asset classes
- Flexible deployment options to facilitate widespread market adoption
The VMware Blockchain advantage: native integration delivers performance, efficiency, and improved security
Writing enterprise applications that perform complex multiparty workflows requires a trusted blockchain platform that can be integrated with existing systems, as well as a feature-rich smart contract language that empowers developers to build distributed applications that can fully take advantage of the underlying platform’s capabilities. VMware Blockchain with Daml is designed for the performance, scale, and high availability that market infrastructure providers require. The solution also implements the full Daml sub-transaction privacy models, enabling use cases that require atomic transactions, while preserving fine-grained data disclosure.
Realizing the value of the DLR platform requires the enterprise-grade production software and support of VMware Blockchain with Daml, including:
- Provable data integrity to guarantee that all parties share a single source of truth
- Privacy by design, with data segregation to support regulated industries
- Ease of day-two operations, with built-in management, deployment, and monitoring
- 24x7x365 support for VMware Blockchain and Daml driver
- Flexible deployment options supporting today’s centrally managed on-premises solution and tomorrow’s multi-organization, multi-cloud future
- Scale and performance to meet DLR’s growing needs
Participants (and the market) on the Broadridge Distributed Ledger Repo will reap significant advantages, including the ability to:
- Minimize settlement exposure and capital costs
- Reduce operational risk and cost by eradicating manual processing and errors
- Safeguard and enhance rights and permissions