Welcome to the latest episode of The Fuse Podcast. This time, Fuse leader Shruti Ajitsaria leads a fascinating conversation on how distributed ledger technology can help to enhance collateral mobility.
DLT is a decentralized system for recording, sharing, and synchronizing transaction data across multiple participants in real time. Unlike traditional systems reliant on central intermediaries, DLT ensures transparency, security, and immutability, making it a game-changer for collateral management.
Collateral in capital markets includes equities and fixed-income bonds, used primarily as credit mitigants. But inefficiencies in current systems—such as fragmented collateral pools, operational delays, and settlement risks like delivery failures—highlight the need for innovation. This is where DLT comes in.
By tokenizing collateral to enhance mobility without physically moving the underlying assets, DLT enables real-time settlement, reduces risks of delivery-versus-payment (DvP) or delivery-versus-delivery (DvD) failures, and ensures operational efficiency.
To discuss this on The Fuse Podcast by A&O Shearman, we are joined by:
- Olly Benkert, co-founder and chairman of HQLAx, a Fuse cohort member who enhance efficiencies in the securities finance and repo industry using DLT
- Mathew McDermott, global head of digital assets at Goldman Sachs
- Philippe Noeltner, counsel at A&O Shearman specialising in debt securities issuance, fintech, derivatives and market infrastructure.
In the conversation, we cover the regulatory and legal considerations to support DLT-based collateral management, as well as the likelihood of market adoption and the future integration of DLT.
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