Goldman Sachs (NYSE: GS) and HQLAx, a tokenisation platform based on distributed ledger technology, have announced the completion of the first agency securities lending transaction on the blockchain.
According to HQLAx, a transaction involving a series of 35-day term transactions included an undefined sum of hundreds of millions of dollars.
Digital Collateral Records (DCRs) are ISIN-level securities trackers created by HQLAx to facilitate the transaction. In exchange for lent assets from BNY Mellon, the liquidity provider, Goldman Sachs got a digital copy of the deals.
In addition, HQLAx tokenised the securities held by the original custodian, allowing the asset to be traded and settled without moving.
Goldman Sachs settles first security lending deal. Image: finbold
Elimination of transaction mechanism
Following the agreement, ISIN-level DCRs are accompanied by precise ISIN amounts retained in custody. The records let holders and agents transfer ownership of any HQLAx distributed ledger security. Notably, the product enables parties to do business without conventional settlement procedures.
This is yet another essential step in our deployment of DLT to ease conventional financial operations and unleash improvements in market participant efficiency. Amar Amlani, Head of EMEA Digital Assets at Goldman Sachs, said he is looking forward to boosting volumes with his peers in the coming months.
The participation of HQLAx aims to reduce expenses for large banks required to maintain high-quality liquid assets for Basel III balance sheet compliance.
Securities lending also helps financial organisations boost their efficiency and execute deals immediately.