HQLAᵡ confirmed it was involved in an intraday repo transaction where Goldman Sachs borrowed cash from Clearstream in exchange for collateral held on the HQLAᵡ DLT platform. The transactions were part of the European Central Bank’s (ECB’s) wholesale DLT settlement trials using central bank money. In this case, the cash leg of the transaction used the Bundesbank’s Trigger solution.

While HQLAᵡ has participated in several delivery versus payment (DvP) repo simulations, this is the first transaction involving real cash settlement.

HQLAᵡ is a collateral mobility solution. The assets held by custodians are locked and digitized in the HQLAᵡ digital collateral registry, with the legal agreements enabling collateral to transfer instantly using DLT, rather than waiting for T+2 settlement. It conducted its first live transaction in 2018.

For the trial, the trades were agreed via the Eurex Repo F7 trading system. Both legs of the transaction were settled and returned on the same day. All ECB trials required a market system operator, which in this case was Deutsche Börse’s Clearstream as operator of its D7 digital securities platform.

Intraday transactions are seen as one of the killer apps for institutional DLT. That includes collateral mobility as HQLAᵡ already enables, intraday repo, intraday FX swaps and tokenized collateral for intraday margin purposes.

“Intraday markets offer a valuable tool for institutions to optimize their liquidity and collateral more efficiently while also acting as a method to manage risks and create new revenue streams,” Amar Amlani, Head of EMEA Digital Assets, Goldman Sachs. “DLT solutions such as HQLAᵡ combined with digital money solutions provide market participants with greater precision and simultaneous settlement which are critical for intraday markets to operate more effectively at scale and free up key resources.”

While HQLAᵡ may have been in production for years, the ability to provide an instant DLT settlement leg has not been available. HQLAᵡ is preparing to work with Fnality, the digital cash settlement platform, to support GBP repo settlement, subject to Fnality getting regulator approval. The plan was to launch this year.

If something like Germany’s Trigger solution is allowed to operate on a more prolonged trial basis, that could enable Euro repo. There were hopes that the ECB might extend the trials, as Switzerland did with its wholesale CBDC. However, today the ECB announced that as a first step, the Eurosystem will consult with the trial participants in January regarding lessons learned.

On the other side of the pond, Broadridge has been running an intraday repo platform for some time and processes more than $1 trillion a month. The big advantage for HQLAᵡ is it already has more than a dozen major institutions that are integrated with its solution.