(In)Efficiencies of current financial market infrastructures - a call for DLT?

Dr. Basil Guggenheim, Prof. Dr. Sébastien P. Kraenzlin and Dr. Christoph Meyer



JEL classification
G15, G21, G23

Financial market infrastructure, secured money market, distributed ledger


We use unique individual bank-to-bank repo transaction data to empirically assess the efficiency of the existing Swiss financial market infrastructure (FMI) for executing delivery versus payment transactions. This approach enables us to identify its current benefits and drawbacks and discuss how these could be addressed and to what extent distributed ledger technology (DLT) could provide a remedy. We find that the fastest settlement time for repo transactions is 12 seconds, but that settlements are often delayed by more than 10 minutes due to the lack of collateral availability. We conclude that the cross-border availability of securities needs to be addressed by either improving interoperability of existing infrastructures or using new technologies.