EquiLend, the major institutional securities lending provider, announced plans to use blockchain to create a “single source of truth” for securities finance transactions. Globally it processes $2.8 trillion in trades monthly on its main platform. Its directors include Bank of America, BlackRock, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, State Street.
The new initiative 1Source aims to eradicate reconciliation breaks and settlement failures. In other words, where one counterparty believes the transaction details are different from the other. If distributed ledger provides a golden record of the transaction, this shouldn’t happen.
The solution will be open to all market participants and interoperable with any vendor or party interested in connecting. It’s currently in the design phase.
“For years, the securities finance industry has addressed the symptoms of its costs and inefficiencies rather than attacking the root cause,” said Ken DeGiglio, Chief Information Officer of EquiLend. “The EquiLend 1Source initiative presents the opportunity to implement new technologies that can allow the industry to completely reimagine how platforms work and share information, how counterparties interact and how true, single-source data can be experienced.”
Distributed ledger has already been deployed in various similar applications for securities lending, collateral management and swaps. Many major institutions such as JP Morgan, Goldman Sachs, Clearstream, ING are involved in and use HQLAX, the collateral trading solution.
More recently, JP Morgan started using its own blockchain solution for collateral management.
Meanwhile, in 2020 the Tel Aviv Stock Exchange launched a blockchain for securities lending. And derivatives clearing firm OCC is working with blockchain startup Axoni.