Finextra sat down with Lee Braine, managing director in the Chief Technology Office at Barclays, to gain exclusive details on the of the bank’s 2023 hackathon.

The hackathon will invite participants to engage with novel industry architectures to improve the complex world of repo post-trade services. A repo (repurchase agreement) is a form of short-term borrowing. They are used for securities financing transactions that allow firms to borrow cash and allow investment firms to lend cash at reduced risk because securities are used as collateral.

The sector is ripe for disruption, as the legacy systems of market players can be inefficient with outdated process that are not equipped to rapidly process the volume transactions necessary in this space. Daily turnover in the UK and EU’s repo market alone totals over 130,000 transactions with value over £3.4 trillion.

Participants in the hackathon will be asked to create industry-wide data architecture and technology solutions to streamline these trade flows and improve operational efficiencies. In a series of challenges, participants will leverage the Fintech Open Source Foundation (FINOS) Common Domain Model (CDM) process standard for repo (representing core trade events), and will be able to use Barclays-provided APIs for market interactions.

The hackathon will include coding various steps in the lifecycle of the post-trade processing of repo transactions, with a focus on interactions between counterparties and market infrastructure services. It aims to explore technology solutions to ensure data is consistent and accurate across the industry, including dealers, clients and market infrastructures.

Braine explains that the RepoHack 2023 has been a couple of years in the making, with a number of stars needing to align before the event could take place. The first of these was for a trade association to coordinate the industry in creating the draft version of the CDM for repos: “There has been a lot of effort liaising with trade associations and financial institutions to work through the priority order for the components to develop in the CDM. Interest rate swaps were first, followed by collateral management, and we’re now on to repos.”

There was effectively a “passing of the baton” for the CDM when attention shifted from the International Swaps and Derivatives Association (ISDA) with its focus on derivatives, over to the International Capital Market Association (ICMA) with its initial focus on repos.

Braine explains that, as the draft of the repo functionality was completed only earlier this year, “we’re operating at the leading edge,” and firms which participate in RepoHack 2023 will also have a real opportunity to influence the direction of the standard. He hopes that, by encouraging buy-in from more market players at this early stage, this will allow the industry to move forward with innovation in a more cohesive and efficient manner.

“Firms will be able to test the CDM and potentially even identify changes they’d like to see and feed suggestions back into the open source model. A reason we’re doing a hackathon on this topic now is that the CDM for repos has reached a sufficient level of maturity for the industry to start prototyping solutions using it, so firms could assess for themselves whether and how it could be useful in future.”

Braine further explains: “It's always challenging to adopt a new standard because you typically need to change several current norms. Hackathon participants will have an opportunity to rethink their internal systems and even consider how market infrastructures could provide their new solutions. There are potentially opportunities similar to outsourcing, where a bank may look to rationalise its existing infrastructure and simplify its technology estate by effectively delegating processing to market infrastructures. Also, consider how do firms know they're doing the right processes in the right way? Well, one way in future could be to perform standardised processing using the CDM, with the results being a stream of standardised events.”

The hackathon will run as a two-day, in-person event held at Barclays Rise London on the 27th and 28th of September this year. Barclays is expecting registrations from financial institutions (large and small), big techs, and fintechs, across the UK, EU, and US.

“This will be an opportunity to transform the industry by using and improving standards that the entire industry can get behind. Something like this enables participants to experiment and discuss with peers what is happening at the cutting edge of the space. If participants already have new repo initiatives in flight within their firms, they will also be able to explore how such initiatives could potentially connect with the CDM in future,” Braine concluded.

Barclays is collaborating with ICMA, ISLA, ISDA and FINOS for the RepoHack 2023 event. A panel of four industry judges will assess the participants’ solution and presentations:
- Lee Braine, managing director, Chief Technology Office, Barclays
- Peter Left, head of digital and markets innovation, Lloyds Bank
- Gabriel Callsen, director, FinTech and Digitalisation, International Capital Market Association (ICMA)
- Minesh Patel, chief technology officer, REGnosys

The bank invites industry practitioners (including banks, market infrastructures, corporates, fintechs, etc) to register by 18 August 2023.