BNY Mellon and Goldman Sachs International (“Goldman Sachs”) have successfully completed the industry’s first agency securities lending transactions using the HQLAᵡ Distributed Ledger Technology (DLT) platform.
As part of the combined series of 35-day term transactions with a total size in the hundreds of millions of US dollars, HQLAᵡ 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 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 HQLAᵡ distributed ledger, without the need for conventional settlement mechanisms.
It also 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 HQLAᵡ 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.
“This represents another key step in our adoption of DLT to facilitate traditional financial activity in order to unlock efficiency gains across market participants. We are looking forward to growing volumes with our counterparts over the coming months,” said Amar Amlani, Head of EMEA Digital Assets at Goldman Sachs.
“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 Guido Stroemer, co-founder and CEO of HQLAᵡ. “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.”
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2022, BNY Mellon had $43.0trillion in assets under custody and/or administration, and $1.9 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of NewYork Mellon Corporation.
Goldman Sachs is a leading global financial institution that delivers abroad range of financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
HQLAᵡ is a financial technology innovation firm that specialises in delivering liquidity management and collateral management solutions for institutional clients in the global securities lending and repo markets.