01The situation: institutional volumes, fragmented cash settlement
Average daily volume of distributed-ledger repo on Broadridge DLR, June 2026 (ICMA report).
Natively digital bonds issued on HSBC Orion by sovereigns, supranationals, financial institutions and corporates.
Preparing tokenised deposit pilots on the Swift ledger, with final settlement in existing systems.
Distributed-ledger securities infrastructures are no longer experiments: they handle volumes comparable to established markets. But each platform has invented its own answer to the cash leg, the asset used to settle the cash side of the transaction.
| Platform | Asset used for the cash leg | What it implies — OpenbanQ reading |
|---|---|---|
| HSBC Orion | Platform-native settlement token | Efficient within the platform; cash must be converted to leave it. |
| Broadridge DLR | Fiat payments and tokenised deposits | Two forms of money coexist in the same flow, hence two liquidity circuits. |
| Kinexys (J.P. Morgan) | Tokenised deposits | Commercial bank money from a single issuer: risk and access defined by that issuer. |
| DZ BANK / KfW pilot | Central bank money, Bundesbank trigger solution | Credit-risk-free asset, but accessed through a national mechanism, still at pilot stage. |
For ICMA, the availability of digital money matters as much to the future of DLT securities as smart contracts themselves.ICMA, Smart contracts and DLT-based fixed income markets, September 2026, p. 11–12
02The mechanism: when finality does not cross rails, liquidity doubles
A digital settlement asset must pass three tests. If a single one fails, the bank keeps a second liquidity buffer on the existing rail.
- AvailabilityA digital asset exists and circulates on the rail: native token, tokenised deposit, regulated stablecoin or wholesale central bank money.
- RecognitionPrudential and post-trade frameworks allow this asset to actually perform the settlement function.
- FinalityThe moment an order becomes irrevocable is certain whichever rail is used, including when a CSD operates both.
When finality between the DLT rail and the existing rail is not guaranteed on both sides, the bank holds a buffer on each: the same liquidity is tied up twice. ICMA notes that, without recognition, participants maintain parallel funding and liquidity arrangements in the existing environment, reintroducing the costs and complexity automation was meant to remove.
03The decision: a dual rail costs twice
The first cost weighs on the balance sheet without appearing in IT budgets; the second is visible but does not go away by itself.
| Liquidity — balance sheet and ALM | Infrastructure — opex and organisation | |
|---|---|---|
| What is duplicated | Cash, pre-funding and collateral tied up on each rail | Ledgers, IT run, controls and reconciliation |
| What causes it | Unrecognised settlement asset or uncertain finality between rails | Coexistence of the DLT rail and the existing rail |
| Nature of the cost | Carry and opportunity cost, on balance sheet | Operating expense and run cost, in the budget |
| Data to request | Intraday balances and pre-funding per rail; blocked collateral and haircuts | Volumes per rail; reconciliation and exception FTEs; run cost of both environments |
| Who bears it | Treasury, ALM | COO, CIO, securities operations |
The two costs are linked: the coexistence of systems creates uncertainty about finality, and that uncertainty is what pushes treasury to keep a second buffer.
What the bank must decide
- One settlement asset per use caseTo be decided jointly by treasury and securities services, before joining any network or CSD DLT rail.
- The regulatory priority to advocateICMA asks the market to prioritise availability, recognition and finality.
- The acceptability threshold for the dual railThe DLT volume beyond which both costs are no longer justifiable.
Sources : ICMA, Smart contracts and DLT-based fixed income markets, September 2026 (p. 11–12 and 17); analysis grids and diagrams: OpenbanQ.