Muqassa and Blockchain-Enabled Instimatch to Introduce Repo Trading Platform to Saudi Market

Muqassa, a Saudi-based subsidiary of the Tadawul Group specializing in trade settlement, has entered into a Memorandum of Understanding (MoU) with Instimatch, a Swiss cash management platform utilizing blockchain technology.

The aim is to introduce a repo trading platform to enhance the financial framework of the Saudi Capital Market.

This repo trading platform, facilitated by Muqassa, will serve as a short-term lending mechanism involving the sale and repurchase of securities, primarily government bonds, to enhance liquidity. Muqassa's role is crucial in mitigating post-trade risks by implementing innovative settlement mechanisms.

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The MoU, formalized during the Saudi Capital Market Forum (SCMF) in Riyadh, sets forth Muqassa's responsibility for central clearing of all repo transactions on the new platform.

Instimatch, leveraging blockchain expertise and collaborating with platforms like R3 and Algorand, will continuously enhance the trading platform in parallel with Muqassa, ensuring alignment with user needs.

Moreover, the agreement paves the way for joint efforts to introduce novel products and services, contributing to the diversification and development goals of the Saudi capital market under Vision 2030.

Philip Drury, Global Head of Technology and Communications Banking at CitiGroup, revealed during the SCMF Saudi Arabia's ambitious aim to transition 70% of domestic payments to non-cash methods by 2025, highlighting the country's progressive financial agenda.

It is worth noting that a repo, short for repurchase agreement, is a financial arrangement where a bank sells securities, typically government bonds or other stable-value debt instruments, to an investor with the agreement to repurchase them at a slightly higher price after a short period, effectively functioning as a short-term lending mechanism.