Bank of New York Mellon Corp (BNY) completed its first triparty repurchase agreement with Citadel Securities using a tokenized representation of a 2-year U.S. Treasury note, according to a press release from the bank.
Citadel Securities purchased the Treasury through Tradeweb, after which BNY recorded a digital representation of the security on its private digital ledger. The tokenized representation settled within minutes, bypassing the standard T+1 settlement cycle that typically requires one business day after a trade.
Following settlement, Citadel Securities used the tokenized Treasury as collateral in an overnight repurchase agreement with BNY and received cash in return. The transaction demonstrated how tokenization could facilitate faster access to liquidity through institutional financing.
How Tokenization Streamlines Processes
Tokenization represents an asset digitally on a ledger, potentially allowing trading, settlement, and collateral management to become faster and more transparent. In this transaction, the Treasury retained its role as a financial asset while its digital representation moved through BNY's existing market infrastructure.
Traditionally, moving securities between different systems involves delays, intermediaries, and operational complexity. The successful completion of this transaction suggests that institutions could deploy high-quality collateral with reduced friction across financial markets.
Limitations and Context
The transaction demonstrates a specific institutional use case rather than a market-wide transformation. It does not indicate that all U.S. Treasuries can now settle instantly or that traditional settlement systems have been replaced.
This move follows BNY Mellon's launch of tokenized deposits in January 2026 for institutional clients, which focused on growing demand for digital cash supporting faster transactions and operations beyond traditional banking hours.
