Securities Lending Overview
Institutional-grade securities lending on Canton Network, delivering instant settlement, full transparency, and dramatically lower costs.
What Is Securities Lending
Securities lending is the temporary transfer of financial instruments — equities, fixed income, ETFs, or tokenized real-world assets — from a lender to a borrower. The borrower posts collateral and pays a periodic fee for the duration of the loan. Traditionally, this market is dominated by custodian banks and prime brokers who intermediate every transaction, adding layers of cost, counterparty risk, and settlement delay.
Dualis Finance reimagines securities lending as a peer-to-peer, on-chain marketplace built on Canton Network. By leveraging DAML smart contracts for atomic settlement and Canton's privacy sub-transaction model, Dualis enables institutions to lend and borrow securities directly — without a central intermediary — while maintaining full regulatory compliance and data confidentiality.
Traditional vs. Dualis Comparison
The table below highlights the key structural differences between conventional securities lending and the Dualis on-chain model.
| Dimension | Traditional | Dualis Finance |
|---|---|---|
| Settlement | T+2 (often T+3 cross-border) | Instant atomic settlement |
| Borrower Fees | 50 – 200 bps | 5 – 20 bps |
| Market Access | Large institutions with prime broker relationships | Any verified institutional participant |
| Transparency | Opaque; bilateral OTC terms | Full on-chain audit trail |
| Counterparty Risk | Relies on intermediary creditworthiness | Smart-contract-enforced collateral |
| Collateral Reuse | Rehypothecation with limited visibility | Programmable reuse with full traceability |
High-Level Workflow
Every securities lending transaction on Dualis follows a six-stage lifecycle managed entirely by DAML smart contracts on Canton.
- Offer — A lender publishes an offer specifying the security, quantity, minimum collateral ratio, acceptable collateral types, and the lending fee rate. Offers are visible to all eligible counterparties on the platform.
- Match — A borrower accepts the offer or the Dualis matching engine pairs compatible offers and bids. The match creates a pending deal contract on Canton.
- Collateral Lock — The borrower's collateral is atomically locked into the deal contract. Collateral adequacy is validated against the lender's requirements and the borrower's credit tier parameters before the deal can activate.
- Active — The security is transferred to the borrower and the deal enters its active phase. Fees accrue continuously and collateral is monitored in real time. Margin calls are triggered automatically if the collateral ratio falls below the maintenance threshold.
- Return — The borrower returns the equivalent securities (fungible return). The smart contract verifies the returned quantity and quality before proceeding to settlement.
- Settle — Collateral is released to the borrower, accrued fees are distributed to the lender and protocol, and the deal contract is archived. Settlement is atomic — all legs execute in a single Canton transaction.
Supported Securities
Dualis supports lending across multiple asset classes, each represented as tokenized instruments on Canton Network:
- Equities — Tokenized shares of publicly listed companies, including fractional positions.
- Fixed Income — Government and corporate bonds with automated coupon handling.
- ETFs — Exchange-traded fund units with real-time NAV-based collateral valuation.
- Tokenized RWAs — Real-world assets such as trade finance receivables, structured products, and commodity-backed tokens.
Next Steps
Continue to the following sections for a deeper dive into the securities lending module:
- Marketplace Mechanics — offer creation, matching logic, and deal lifecycle details.
- Fee Structure — borrower fees, protocol share, and volume-based tiers.
- Netting & Settlement — automated bilateral netting and batch processing.