BNY, Citadel Securities Complete Triparty Repo Trade Using Tokenized US Treasuries

BNY, the world’s largest custodian bank, and global market maker Citadel Securities have completed a transaction using tokenized US Treasuries, highlighting the commercial potential of blockchain-based settlement and collateral management for financial assets.

CoinDesk reported on October 13 that BNY and Citadel Securities announced the previous day they had completed the process for a triparty repurchase agreement, or repo, transaction using tokenized US Treasuries. The trade was designed to test whether blockchain technology could make Treasuries more efficient to use in settlement and funding.

US Treasuries are a key form of collateral for financial institutions seeking short-term funding or liquidity for trades. In traditional financial systems, however, moving Treasuries between accounts or settlement networks takes time, making it difficult to reuse collateral immediately.

The firms said the transaction validated a process for moving tokenized Treasuries from the settlement stage to the funding stage. That could help financial institutions reuse collateral more quickly and secure liquidity for other trades. Dan Dougherty, head of digital assets operations at Citadel Securities, said the efficient movement of high-quality collateral is critical to the smooth functioning of financial markets. Cutting delays across the transaction lifecycle could improve the operating efficiency of institutional financial markets.

BNY said it plans to expand capabilities related to digital cash and tokenized deposits to support blockchain-based settlement and funding. It also plans to extend settlement operating hours for Federal Reserve-eligible securities and triparty repo transactions in existing financial systems, with the goal of supporting European and Asian trading hours next year.

Caroline Weinberg, BNY’s chief innovation officer and head of market structure, said using tokenized US Treasuries for both settlement and funding is helping build a more connected, efficient and always-on financial system.

On Wall Street, efforts to move traditional financial assets onto blockchain networks through tokenization are gaining traction. Major institutions including BlackRock, Franklin Templeton and JPMorgan are also advancing tokenized fund and securities businesses. Shorter settlement times, greater automation and more efficient asset transfers are among the main expected benefits.