In a significant stride toward modernizing the securities lending sector, EquiLend has officially launched the pilot phase of its Distributed Ledger Technology (DLT) platform, 1Source. Anticipated for full-scale deployment in Q3 2024, this innovative solution, backed by major financial institutions including JP Morgan, Bank of America, Goldman Sachs, Barclays, State Street, and UBS, is set to reshape the landscape of securities lending.
EquiLend’s 1Source: Pioneering a New Era in Securities Lending
Revolutionizing Securities Lending
While EquiLend has long provided a comprehensive record of trades, a fundamental challenge has persisted in the industry. Currently, each counterparty manually copies trade details into their respective internal systems. This practice creates complications when subsequent modifications, such as changes in interest rates, render the separate records out of sync. The crux of 1Source’s mission is to eliminate the need for labor-intensive manual reconciliations by introducing a shared DLT ledger for agreed-upon transactions and subsequent changes.
Cost Savings and Efficiency: The Promise of 1Source in Securities Finance
Potential Cost Savings
An independent consultant in the field has estimated that the adoption of 1Source has the potential to generate substantial cost savings for the securities lending industry, possibly reaching up to $100 million. This is a testament to the transformative power of DLT technology in streamlining operations and improving efficiency.
Streamlined Settlement Times
While 1Source is poised to bring about transformative changes, it is important to note that it is not specifically designed to align with the shortened settlement times scheduled to commence in Q2 2024. However, its implementation could still play a pivotal role in enhancing settlement processes, contributing to a more streamlined and efficient industry.
Ken DeGiglio’s Vision
Ken DeGiglio, the Chief Information Officer of EquiLend, expressed the company’s overarching vision for 1Source, stating, “Our goal was to solve critical industry pain points and to empower businesses to continue to trade accurately and efficiently.” The successful initiation of the EquiLend 1Source pilot program underscores the market’s resonance with this vision, marking the commencement of a new era characterized by modernization and efficiency in the securities finance industry.
Underpinnings of 1Source
1Source is built upon Digital Asset’s DAML technology, a testament to EquiLend’s commitment to leveraging cutting-edge solutions. Additionally, EquiLend is an active member of the Canton Network, fostering interoperability with other DAML-based solutions, further enhancing the platform’s versatility and potential.
Conclusion
EquiLend’s 1Source DLT platform has embarked on its pilot journey, signaling a promising future for the securities lending industry. As the platform aims to tackle longstanding challenges associated with manual record-keeping and reconciliation, it promises substantial cost savings and operational efficiencies. While not expressly designed for the upcoming shortened settlement times, its implementation could nonetheless contribute to a more streamlined industry. With the backing of major financial institutions and a visionary leadership team, 1Source marks the dawn of a new era for securities lending, driven by innovation and efficiency.
