Tokenization is this year’s hot topic in blockchain, and our conversations with clients often move quickly to predicting where the breakout use case(s) will occur. Private markets assets are certainly in focus, understandably. However the announcement from Broadridge that UBS and a global Asian bank have successfully executed its first cross-border intraday bilateral repurchase agreement (repo) transaction, has given a boost to “digital securities as collateral” use case.

Trade and post trade workflows in this use case remain mired in manual and inefficient processes. Look for a report from Celent’s Dayle Scher later this quarter on how post trade is being re-architected. But it’s clear that these inefficiencies costs time/resources and consumes risk capital. Even a small reduction in required risk capital can result in huge revenue impacts. Broadridge estimates that users of platforms such as DLR could save $1 million for every 100,000 repo trades per year.

Risk and liquidity were cited as a driver for the latest news. Beatriz Martin, UBS Group Treasury commented in the Broadridge press release, “Intraday repo is a valuable tool to manage our liquidity usage and provides flexibility in our funding capabilities with reduced operational risk.”