Private Blockchains in Securities Financing: A Closer Look

The Role of Private Blockchains in Securities Financing

Tokenization enthusiasts in both crypto and traditional finance might be surprised to hear that well over $1.5 trillion worth of repurchase agreements and other forms of securities financing are executed monthly using private blockchains. While this is a sliver of a highly fragmented, multitrillion-dollar market, these private blockchain loops are being employed at a decent scale by many of the world’s biggest banks and institutions, easily dwarfing the much-hyped tokenization of real-world assets (RWA) associated with open chains like Ethereum.

Interoperability and Innovation in the Market

Wall Street titans like JPMorgan and Goldman Sachs are reluctant to share specific data when it comes to areas like repo trading. JPMorgan reportedly processes up to $2 billion of transactions a day on its Onyx blockchain, allowing clients to settle repo transactions worth billions of dollars within minutes. These platforms are also building cross-chain interoperability and integrating bank-grade cash settlement tokens, creating new opportunities for efficiency and market growth.

Goldman Sachs’ global head of digital assets, Mathew McDermott, points to inefficiencies in conventional repo and securities lending markets brought about by years of layering and fragmentation. DLT has the potential to significantly improve existing processes and create new markets, bringing positive changes to the industry.

Given that tokenization is firmly entrenched in the crypto mindset, it will be interesting to see how these closed loops feed into the public blockchain meets TradFi narrative. Although it primarily flies under the radar, platforms like Broadridge’s intraday repo business may have the best product market fit in all of the tokenization space, paving the way for future innovations in the industry.