Blockchain Firms Fnality and HQLAᵡ Complete Testing for Intraday Repo Settlement on Eurex Repo F7 System

Fnality and HQLAᵡ Successfully Test Blockchain Solution for Intraday Repo Settlement

In a groundbreaking development for the financial industry, bank-backed blockchain firms Fnality and HQLAᵡ have announced the successful completion of end-to-end testing to enable intraday repo settlement. This achievement paves the way for trades on the Eurex Repo F7 system to settle via the two blockchain networks, with a production launch scheduled in Q4, pending UK regulatory approvals.

The key advantage of this new system is the ability to settle trades at a specific time of day, allowing institutions to execute intraday repurchase agreements (repos) and have precise control over their liquidity. This is a significant improvement over conventional repos, where collateral settlement typically takes two days.

Simone Cortese, Fnality’s Director of Product Management, highlighted the benefits of this new system, stating, “That’s an unprecedented level of control of that collateral and cash management. That’s really the vision.”

The UK repo market, which is nearly as large as the EU’s, sees an average weekly outstanding balance of GBP 8,240 billion ($10.45 trillion) in 2023, with GBP 1,716 billion in daily trades, according to the London Reporting House.

The successful interoperability trials between Fnality and HQLAᵡ involved major financial institutions such as Goldman Sachs, Santander, UBS, JP Morgan, and WeMatch. The ability to transfer ownership of collateral and settlement tokens between separate blockchain networks is a significant achievement in the industry.

Fnality’s Atomic Settlement Protocol (ASP) and HQLAᵡ’s use of R3’s Corda enterprise blockchain have played a crucial role in enabling this interoperability. The collaboration between Fnality, Adhara, R3, and HQLAᵡ has also led to the development of the open-source Hyperledger Harmonia interoperability protocol.

In addition to the successful testing, Fnality is also exploring other avenues for expansion, including foreign exchange and payment versus payment (PvP) transactions. The company is in discussions with US regulators about a potential launch in the country, following an investment from the DTCC last year.

Overall, the completion of end-to-end testing for intraday repo settlement marks a significant milestone in the adoption of blockchain technology in the financial industry, with Fnality and HQLAᵡ leading the way towards a more efficient and secure financial ecosystem.