BNY, Citadel Securities Complete Triparty Repo Using Tokenized US Treasuries to Streamline Collateral Settlement
Summary
- BNY and Citadel Securities said they completed a triparty repo transaction using tokenized US Treasuries, underscoring the commercial potential of blockchain-based settlement and collateral management.
- The firms said the transaction could help financial institutions reuse high-quality collateral more quickly, secure liquidity, and improve operating efficiency in institutional financial markets.
- BNY said it plans to expand digital cash and tokenized deposits capabilities and extend settlement operating hours, as Wall Street steps up efforts around tokenization of traditional financial assets and shorter settlement times.
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BNY, the world's largest custodian bank, and global market maker Citadel Securities have completed a transaction using tokenized US Treasuries, underscoring the potential to commercialize blockchain-based settlement and collateral management for financial assets.
CoinDesk reported on October 13 that BNY and Citadel Securities said a day earlier they had completed the process for a triparty repurchase agreement, or triparty repo, transaction using tokenized US Treasuries. The transaction was designed to test whether blockchain technology could make Treasuries more efficient to use in settlement and funding.
US Treasuries are a key form of collateral for financial institutions seeking short-term funding or liquidity for trading. In traditional financial systems, however, transferring Treasuries between accounts or settlement networks takes time, making it difficult to reuse collateral immediately.
The two firms said the transaction validated the process of moving tokenized Treasuries from the settlement stage to the funding stage. That could allow financial institutions to reuse high-quality collateral more quickly and secure liquidity for other trades. Dan Doherty, head of digital assets operations at Citadel Securities, said the efficient movement of high-quality collateral is critical to the smooth functioning of financial markets. Cutting delays across the transaction lifecycle can improve operating efficiency in institutional markets.
BNY plans to expand capabilities related to digital cash and tokenized deposits to support blockchain-based settlement and funding. It also plans to extend settlement operating hours for Federal Reserve-eligible securities and triparty repo transactions in the existing financial system, with support for European and Asian trading hours set to begin next year.
Caroline Weinberg, BNY's chief innovation officer and head of market structure, said using tokenized US Treasuries for both settlement and funding is helping build a more connected, efficient and always-on financial system.
On Wall Street, efforts to move traditional financial assets onto blockchain are gaining momentum. BlackRock, Franklin Templeton and JPMorgan are among the major financial institutions advancing tokenized funds and securities-related businesses. Shorter settlement times, greater automation and more efficient asset transfers are among the main expected benefits.
