Friday, September 28, 2018
The Bank of England's Securities Lending Committee took up the question of distributed ledger technologies (DLT) in its September 24 meeting. Three vendors were invited to present their concepts to the group of nearly two dozen UK bankers and their regulators. The presentations and the Committee members' reactions were summarized in the minutes of the meeting. Each vendor approached the market from a different perspective, using a different aspect of DLT. Members found some value in the proposed solutions, yet were generally disappointed in the market impact of the innovative approaches.
The Committee minutes noted that none of the vendors were offering a product that would expand the market for securities lending, either by broadening the number of counterparties or by increasing the universe of lendable securities. Each solution is intended to "improve the efficiency of the existing operational aspects of the securities lending market.
Members agreed that distributed ledger technologies would likely become "important" across all financial markets, but that widespread adoption of a single vendor's solution could pose a "single point of failure" risk. However, members felt that the planned Securities Financing Trade Repository might benefit from the support of these new technologies.