On-Chain Repo
Repurchase agreements on Canton Network — smart contract as compliance artifact, automated lifecycle events.
CTR (USD 10,000+)TRAVEL-RULE (USD 3,000+)ENHANCED-DUE-DILIGENCE (USD 50,000+)
Step 1 · Repo Initiation (Post-Trade Handoff)Policy-EnforcedBlockchain-Native
A repo desk agreeing to lend securities overnight — the collateral already exists, now the financing structure is created.
Cross-rail reference: the underlying securities were acquired on the Securities Trading rail. The repo transaction begins with both counterparties holding positions — one has securities to pledge, the other has cash to lend. Canton Network receives the repo instruction. L5 lit only — handoff.
Step 2 · Daml Smart Contract NegotiationCode-EnforcedBlockchain-Native
GMRA (Global Master Repurchase Agreement) negotiation — but the contract is executable code, not a PDF. Every term is programmable.
The compliance center of gravity. A Daml smart contract encodes the repo terms: haircut, repo rate, maturity date, eligible collateral, margin call triggers, substitution rights. The smart contract IS the compliance artifact — it replaces the paper GMRA with executable, auditable code. L3+L4 lit: execution logic (contract deployment) and account state (collateral allocation) update simultaneously. Sanctions screening fires on both counterparties. D9 (prudential) applies — haircut and margin requirements are regulatory minimums.
Step 3 · Collateral Delivery (Opening Leg)Code-EnforcedBlockchain-Native
The opening leg of a repo — securities delivered to the cash lender (or tri-party agent), cash delivered to the securities borrower. Simultaneously.
Atomic DvP on Canton: securities transfer to the cash lender while cash (or stablecoin) transfers to the borrower in the same transaction. For tri-party repos, BNY Mellon acts as the tri-party agent — holding collateral and managing substitutions. L1+L2+L3 lit — the full stack below the enforcement line. Canton's privacy ensures each party sees only their leg of the transaction.
Step 4 · Automated Lifecycle ManagementCode-EnforcedBlockchain-Native
The tri-party agent managing intraday margin calls, collateral substitutions, and mark-to-market revaluations — but automated by smart contract.
The Daml contract automatically manages the repo lifecycle: daily mark-to-market, margin calls if collateral value drops below the haircut threshold, collateral substitutions (if permitted by the contract terms), and interest accrual. All lifecycle events fire automatically — no human intervention, no missed margin calls, no disputed valuations. L3 Execution lit: lifecycle management is purely code-enforced. This is the second compliance center of gravity — automated lifecycle eliminates operational risk.
Step 5 · Maturity / Closing LegCode-EnforcedBlockchain-Native
The repo maturing — securities return to the borrower, cash plus interest returns to the lender. The mirror image of the opening leg.
At maturity (or on early termination), the closing leg fires atomically: securities return to the original holder, cash plus accrued interest returns to the lender. Same atomic DvP as the opening leg but in reverse. L1+L2+L3 lit. The Daml contract self-terminates after the closing leg settles — no residual obligations, no open positions, no reconciliation needed.
Step 6 · Reporting & Audit TrailPolicy-EnforcedBlockchain-Native
The repo report filed with regulators — but the smart contract has already produced a complete, immutable audit trail of every lifecycle event.
The Daml smart contract has produced a complete audit trail: every margin call, every substitution, every mark-to-market event, every interest payment — all immutably recorded on Canton. Regulatory reporting (SFTR for EU, Form N-MFP for US money funds) can be generated directly from the contract's event log. L5 Application lit only. Structural note: the smart contract as compliance artifact means the audit trail is a byproduct of operation, not a separate process. This is what "programmable compliance" means in practice.
Resolved 6 steps across 1 chain(s). 3 threshold(s) triggered. Frameworks: Bank Secrecy Act, GENIUS Act, OFAC Sanctions Program, FATF Recommendation 16 (Travel Rule), Common Reporting Standard / FATCA.