BNY and National Bank of Canada this week launched EquiLend's 1Source platform, joining a blockchain-based system designed to eliminate manual trade coordination in the securities finance industry.
The stock lending company said global broker-dealers will soon start trading on the platform, and several other companies are close to signing deals. BNY and National Bank of Canada currently execute securities lending transactions through a distributed ledger that maintains a synchronized record of transactions between counterparties.
Industry insiders estimate that the industry currently spends approximately $100 million annually on settlement teams and fixing settlement breaks. EquiLend's system is built to reduce these costs by keeping both sides of each transaction aligned from the beginning, rather than companies recording details separately and fixing discrepancies later.
Nehal Udeshi, Head of Finance, BNY Securities
“This milestone underscores BNY's commitment to innovation and leveraging new technology to reduce risk,” said Nehal Udeshi, BNY's Head of Securities and Finance. “With 1Source, we aim to manage the challenges associated with manual reconciliation while delivering benefits to our clients.”
For example, EuiLend's service has been used by eToro for the past six months, allowing users in the UK and Europe to earn additional income by lending out their stocks. Similar products were launched by Robinhood in 2022 and Interactive Brokers in 2023.
More companies preparing to join the network
Carl Atty, managing director and head of global securities finance at National Bank of Canada, said the bank joined the platform as part of its focus on technology solutions for its customers.
“This milestone lays the foundation for broader implementation and future enhancements, enabling streamlined processes, increased efficiency and increased resilience in securities finance markets,” Atty said.
EquiLend developed the platform using Digital Asset's Canton blockchain technology. This allows multiple parties to share transaction data while maintaining privacy control. The system was launched for cash-backed North American equities, but expansion into corporate bonds, non-cash collateral, and European markets is planned.
A 2022 third-party analysis by Vy Solutions estimates that the platform has the potential to save the securities finance industry hundreds of millions of dollars annually by lowering operating expenses and reducing payment failures.
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A platform that targets fragmented back-office systems
The securities lending market has relied on fragmented back-office systems in which counterparties maintain separate records of the same transactions. Discrepancies in quantity, rates, or settlement dates often surface days after a trade is executed, creating reconciliation headaches and liquidity risks.
Rich Grossi, EquiLend CEO
EquiLend's system places each transaction on a shared ledger, allowing both parties to see the same information in real time. Lifecycle events such as recalls, price changes, and returns are handled within the same environment and both are automatically updated at the same time.
said Rich Grossi, CEO of EquiLend. “Each new participant strengthens 1Source’s network effects and accelerates industry-wide benefits of increased accuracy, transparency, and efficiency.”
The platform currently supports loan origination, daily mark-to-market calculations, benchmark-based interest rate adjustments, recalls, and buy-ins. EquiLend plans to add automatic reratings to its large loan book related to benchmark changes, which should reduce another disruption factor when base rates change.
