Blythe Masters Firm Gets Foothold in Repo Market With DTCC Deal

  • DTCC unveils plans to use blockchain in repo transactions
  • Digital Asset investors include ASX, JPMorgan, CME, ICAP

Digital Asset Holdings, the blockchain startup run by ex-JPMorgan Chase & Co. executive Blythe Masters, has found a new foothold in finance, with the world’s largest securities settlement and clearinghouse agreeing to an experiment using its technology.

The Depository Trust & Clearing Corp., a post-trade clearing manager, said it plans to work with Digital Asset to bring blockchain to repurchase agreements, or repos, according to a joint statement issued Tuesday. The project will begin immediately, the announcement said.

Repos are a form of collateralized, short-term borrowing used by Wall Street firms and investment companies. The Federal Reserve Bank of New York has been working to reform the short-term funding market after it nearly collapsed in the 2008 financial crisis. It said last year that more time is likely needed to complete changes to eliminate systemic risks, while noting that a great deal of progress has been made.

“This was a case where we thought it was useful for the market,” said Murray Pozmanter, managing director at DTCC. “The distributed ledger technology facilitated something we couldn’t do previously.”

DTCC spent about a year investigating how it could bring the technology to the repo market, Pozmanter said, and settled on Digital Asset because it had already developed a prototype.

The deal comes as markets around the world eye potential uses for blockchain, a so-called distributed ledger system that has been hyped for its ability to speed up and streamline financial transactions. 

The agreement with DTCC follows Digital Asset’s announcement that Australia’s main exchange operator, ASX Ltd., agreed to invest A$14.9 million ($11.2 million) into the startup. Digital Asset is introducing blockchain to ASX to change the way stock transactions are processed and cleared.

Digital Asset is one of about a dozen startups trying to prove that blockchain, the technology underlying bitcoin, can transform financial markets. JPMorgan, CME Group Inc. and ICAP Plc are among its investors.

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