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Banks settle first securities lending transactions on DLT platform from HQLA x
Landmark securities finance transaction on the highly touted HQLA x DLT platform marks an industry first .
BNY Mellon and Goldman Sachs have completed the industry ’ s first agency securities lending transactions using the HQLA x distributed ledger technology ( DLT ) platform . HQLA x is a start-up collateral mobility platform looking to transform the industry through DLT and tokenisation and has gained the backing of some of the securities services industry ’ s biggest players . BNY Mellon and Goldman Sachs were among the initial backers in January 2021 . Through the transaction , HQLA x created ISIN-level securities trackers called Digital Collateral Records ( DCRs ) from loaned securities it received from BNY Mellon , giving Goldman Sachs a digital copy of those trades . The combined series of 35-day term transactions had a total size in the hundreds of millions of US dollars .
HQLA x claimed the ISIN-level DCRs are the first of their kind , representing specific ISIN quantities held in custody . Those records will enable holders and agents to transfer ownership of any security on the HQLA x distributed ledger , without the need for conventional settlement mechanisms . The budding fintech added that the initiative paves the way for eligible clients to reuse ISIN-level DCRs in onward collateral obligations at one or more Triparty Agents . “ We are delighted to be partnering with HQLA x on this milestone . The potential to enhance collateral and inventory mobility is very exciting and something that has been a key industry focus for a number of years ,” said Bill Kelly , head of securities finance at BNY Mellon . The transaction is the latest in a string of recent milestones from the start-up led by ex-UBS securities lending veteran Guido Stroemer . In addition to receiving additional backing from JP Morgan this summer , HQLA x also executed its first live transactions with Commerzbank , Credit Suisse and UBS – three of its original backers back in late 2019 .
“ Agency securities lending activity represents the single biggest source of liquidity for the collateral upgrade market , so welcoming BNY Mellon as a liquidity provider to our platform represents a tipping point for recurring , scalable volumes on our platform ,” commented
Stroemer . “ We are very proud to collaborate closely with strategic partners like
Goldman Sachs and BNY Mellon to develop and implement innovative industry solutions like this one .”
14 Global Custodian Fall 2022