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ZEC $1,243 BNY tokenizes Treasury for Citadel Securities repo deal
BNY and Citadel Securities completed the first use of tokenized assets on a major triparty repo platform.
Key takeaways
- Settlement speed gains. Tokenized Treasuries settled within minutes instead of following the standard T+1 cycle.
- First major platform use. This is the first reported use of tokenized assets on a major triparty repo platform.
- Expansion planned. BNY plans to expand Treasury settlement operations into European and Asian trading hours next year.
What happened
BNY and Citadel Securities completed a triparty repo transaction using a tokenized two-year U.S. Treasury note on October 13, marking the first use of tokenized assets on a major triparty repo platform. Citadel Securities purchased the Treasury through BNY on Tradeweb, an electronic trading platform. BNY then recorded a digital representation of the security on its private ledger.
The tokenized security settled within minutes, bypassing the standard next-business-day settlement process for conventional Treasury transactions. After settlement, Citadel Securities pledged the tokenized Treasury as collateral in an overnight repurchase agreement, with BNY providing cash against the security.
BNY's chief innovation and market transformation officer Carolyn Weinberg said the transaction demonstrated how tokenized assets could be used across multiple institutional financial processes. Dan Doherty, digital assets operations lead at Citadel Securities, emphasized the importance of efficient collateral movement for well-functioning markets.
Why it matters
The transaction links multiple stages of the Treasury trade lifecycle, execution, settlement and collateral financing, without requiring the security to move through the usual settlement cycle. This approach puts a tokenized Treasury into an established segment of short-term funding markets rather than treating the digital representation as a standalone asset. The workflow shows how tokenized Treasuries could reduce delays in collateral mobility within institutional financing infrastructure.
Questions readers ask
What is a triparty repo?
In a triparty repo, collateral is held and administered by a third-party bank while one party obtains cash financing against the securities. BNY served as both the triparty platform operator and cash provider in this transaction.
How fast did the tokenized Treasury settle?
The tokenized security settled within minutes on BNY's private ledger, compared with the standard next-business-day settlement process for conventional Treasury transactions.
Why is this transaction significant for institutional markets?
The transaction demonstrates that tokenized conventional government securities can function as collateral in live short-term funding workflows and move from settlement into financing, potentially reducing delays in collateral mobility.
