In a recent turn of events, Bank of New York Mellon Corp (BNY) completed its first triparty repo transaction with Citadel Securities.
According to the press release, the two firms used a tokenized representation of a 2-year U.S. Treasury note to complete a transaction that moved from purchase and settlement to collateral-backed financing.
Details of the triparty repo transaction
It all started with Citadel Securities purchasing the Treasury through Tradeweb. After which BNY recorded a digital representation of the security on its private digital ledger.
Now what’s new here is that the transaction did not follow the standard T+1 settlement cycle, wherein settlement happens one business day after the trade. Instead, the tokenized representation settled within minutes thanks to BNY’s private digital ledger.
Once that was done, Citadel Securities then used the tokenized Treasury as collateral in a repo (an overnight repurchase agreement) with BNY. And finally received cash in return.
What was the purpose of this transaction?
Notably, the tokenized Treasury was used not just to record ownership or facilitate settlement but also to access liquidity through institutional financing.
Traditionally, moving securities between trading, settlement, and collateral management systems can involve delays, intermediaries, and operational complexity.
Tokenization represents an asset digitally on a ledger, potentially allowing these processes to become faster, more transparent, and easier to coordinate.
In this case, the Treasury retained its role as a financial asset while its digital representation moved through BNY’s existing market infrastructure.
Challenges remain
Taking this as the case in point, such methods could further help institutions deploy high-quality collateral with reduced friction across financial markets.
However, nothing happens without obstacles. And so, the transaction does not mean that all U.S. Treasuries can now settle instantly or that traditional settlement systems have been replaced. Instead, it demonstrates a specific institutional use case, rather than a market-wide transformation.
All of this followed another similar move by BNY Mellon, wherein they had launched tokenized deposits in January 2026 for institutional clients, with Ripple Prime among its early adopters.
As expected, the move had focused on the growing demand for digital cash that now supports faster transactions and operates beyond traditional banking hours.
Final Summary
- Citadel Securities purchased the Treasury through Tradeweb, which was settled within minutes.
- Citadel Securities used the tokenized Treasury as collateral in an overnight repurchase agreement with BNY.
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