The Association for Financial Markets in Europe (AFME) published its inaugural Distributed Ledger Technology (DLT) Capital Market report, analyzing the size and growth of the global market in DLT issuance and related secondary market activities.
The report, which will be published on a semi-annual basis, aims to bridge a data gap by offering timely insights into the evolution of the global DLT-based capital market activities and provides a comprehensive overview of the primary DLT fixed income market, secondary markets and valuations, repo transactions, as well as an overview of the size of the tokenized fund industry and that of other tokenized asset markets.
Key findings:
- Over $50 billion in average daily global DLT repo transactions
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In 2024, €3 billion ($3.1bn) of fixed income instruments were issued globally with the use of DLT, a 260% increase from €848 million issued in 2023, but still sub-scale considering the total size of fixed income markets.
- Issuers based in Europe and Asia led by issued amount in 2024, originating €1.7 billion and €1.1 billion, respectively. The issuance in Europe was strongly led by the DLT trials undertaken by the European Central Bank (ECB) and the Swiss National Bank (SNB), accumulating jointly a total of €1.8 billion in 2024 (the central bank trials included issuance by European and US-based entities).
- A total of €483 million was issued in the form of green DLT bonds, representing 16% of the global DLT fixed income amount issued in 2024.
Julio Suaraz, head of Research at AFME, said in a statement: “Although the adoption of DLT in capital markets is currently limited relative to the size of the global market, its recent rapid growth and the emergence of new market participants and product offerings present substantial opportunities for future expansion. Undoubtedly, the DLT-based issuance of securities will continue to grow over time, and we are pleased to be the first association in Europe to regularly produce data on this growing asset class.”
DLT repo market
The DLT framework has enhanced the development of repo transactions facilitating an almost instantaneous settlement execution. Consolidated data on DLT-based repo transactions are scarce. However, platforms such as Broadridge DLR have indicated processing c$50 billion per day. Other platforms such as J.P. Morgan’s Kinexys process c$2 billion per day across all its applications, including intraday repo transactions and other digital payments.
Additionally, as part of central bank DLT repo trials, the European Central Bank (ECB), the Swiss National Bank, and Singapore’s Monetary Authority concluded 7 trial and experiment repo transactions in 2024.
Most of the 2024 repo transactions participating in the ECB Trial were executed on Clearstream D7, which is fully owned by Deutsche Borse, and by SWIAT, the German platform created by a consortium of financial institutions including DekaBank, LBBW, SC Ventures and Comyno.
Other private repo transactions not related to central bank trials were executed in 2024 using tokenized assets such as DLT-based bonds or commercial paper as collateral.
Notwithstanding the participation of leading platforms and the recent central bank trials, the use of DLT in repo transactions continues small relative to the global size of the repo market of c€3-4 trillion transactions per day.