Briefing
The Bank of New York Mellon (BNY) and National Bank of Canada have initiated live trading on EquiLend’s 1Source platform, marking a critical inflection point for Distributed Ledger Technology (DLT) adoption within the high-volume securities finance vertical. This deployment fundamentally alters the post-trade lifecycle by replacing fragmented, multi-party data with a unified, immutable ledger, thus addressing the systemic operational risk and capital drag inherent in manual reconciliation processes. The DLT-based infrastructure is projected to save industry participants hundreds of millions of dollars annually by increasing operational efficiency and reducing costly trade breaks.
Context
The traditional securities finance market → specifically securities lending and repurchase agreements → has long been burdened by a fragmented post-trade environment. The process relies on multiple systems and intermediaries, requiring counterparties to manually reconcile trade details after execution. This prevailing operational challenge creates significant friction, introduces latency, and generates “trade breaks” (discrepancies in transaction records) that must be resolved at high cost and risk, directly impacting capital efficiency and increasing counterparty exposure. The lack of a single, authoritative record has historically necessitated resource-intensive, multi-day settlement cycles.
Analysis
The 1Source platform alters the core operational mechanics of securities finance by establishing a shared, “golden source of truth” for all transaction data across the enterprise and its partners. This DLT-based solution functions as a foundational layer that integrates directly with existing trading and settlement systems, ensuring that every executed trade is immediately recorded on the distributed ledger. The chain of cause and effect is direct → the immediate, shared consensus on trade details removes the need for downstream reconciliation, which is the primary source of operational cost and risk.
For BNY Mellon, this enhances its ability to mitigate risk and manage challenges associated with manual reconciliation, delivering tangible benefits to its clients. The industry significance is the creation of a standardized, automated workflow that improves collateral velocity and reduces operational expenditure across the consortium, setting a new benchmark for post-trade processing in capital markets.
Parameters
- Core Platform → 1Source
- Lead Implementers → BNY Mellon, National Bank of Canada
- Technology Layer → Distributed Ledger Technology (DLT)
- Industry Vertical → Securities Finance (Securities Lending and Financing)
- Primary Metric → Potential for hundreds of millions in annual industry savings
Outlook
The successful live deployment of 1Source by two major financial institutions validates the shift toward DLT as the foundational layer for complex financial workflows. The next phase will involve onboarding the growing pipeline of global broker-dealers and buy-side firms, rapidly increasing the network effect. This consortium-driven approach is establishing an industry standard for post-trade infrastructure, which will pressure competitors to either integrate with the platform or develop parallel DLT solutions to remain competitive on operational costs and capital efficiency. The long-term effect is the transformation of securities finance from a fragmented, T+2/T+1 environment into a near-instant, T+0 settlement system.
