Major Equity Settlement Firm DTCC Launches New Blockchain And Tokenization Experiments

The major equity clearing and settlement firm, Depository Trust & Clearing Corporation (DTCC), has been experimenting with blockchain technology for over three years, has announced two new projects.

The two projects will be called ‘Ion’ and ‘Whitney’ respectively. Both aim at improving post-trade settlements in the private and public sectors through asset digitization and tokenization, respectively.

Ion will function as a proof-of-concept project: aiming to clarify the use of Distributed Ledger Technology and how it can be leveraged for the digitization of assets.

DTCC’s chief of global operations clearing agency services and client services Murray Pozmanter stated:

“Project Ion is about working with the industry to further the value proposition on accelerated settlement leveraging new capabilities such as DLT and tokenized securities, and to learn how DTCC can best deploy these technologies to deliver additional value to clients and the industry.”

Whitney, meanwhile, specifically targets private markets. Particularly those that are in need of automation but don’t have the infrastructure to do so effectively.

DTCC’s business innovation and managing director – Jennifer Peve – explained how project Whitney could greatly help private markets:

“Project Whitney presents an exciting opportunity to leverage emerging technologies and develop completely new solutions from the ground up.”

DTCC focus on blockchain has been built around ensuring stable transaction settlements via global post-trading standards. The firm is engaged with the industry, actively taking inputs and suggestions to assess the market demand. DTCC currently processes $1.7 quadrillion worth of securities transactions every year.

DTCC is continually looking for new use cases for blockchain technology within the capital market. To do so successfully, it has partnered with blockchain infrastructure providers like IBM and R3 in the past to create new decentralized solutions.

Back in 2017, it launched a proof-of-concept based credit derivative settlement project.

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Author: James W

DTCC Urges Financial Institutions to Collaborate in Forming A DLT Regulatory Framework

U.S Depository Trust & Clearing Corporation (DTCC) published a white paper on Feb,12 calling for the establishment of a proper regulatory framework on blockchain technology. The leading American financial markets clearing and settlement company noted that this would help avoid the risks associated with Digital Ledger adoption in future.

This white paper dubbed ‘Security of DLT Networks’ highlights the opportunities and looming risks if financial industry stakeholders do not step up to oversee blockchain implementation. DTCC’s Chief Security Officer, Stephen Scharf, further emphasized on the importance of tech policy upgrades;

“DLT offers great potential, but as with any new technology, it also comes with certain risks. Traditional security measures may not be adequate, so it is critically important that this topic is top of mind for any DLT implementation.”

DTCC’s Proposed Strategy on Blockchain Implementation Oversight

According to the whitepaper, financial market players are better off collaborating to form standardized guidelines on DLT adoption. It continues to read that a coordinated approach would help address the security associated risks in detail. This will in turn assist firms operating and looking to enter the blockchain market to play by the book and grow within a regulated framework.

DLT will notably improve how data is protected, verified and processed. As a result, DTCC suggests that a more tech specific framework would be effective in integrating the DLT networks within IT legalities across the world. An industry consortium to form fundamental operational guidelines was also identified as a long-term solution to the existing legal gaps in the DTCC whitepaper.

There have been previous efforts to form a baseline regulatory framework around blockchain tech but only a few jurisdictions have achieved much. DTCC plans to capitalize on its muscle within the derivatives market to lobby as many financial players and develop a standard for DLT frameworks. Mr. Schaff noted on the importance of a global framework for all industry participants;

“As is common in IT security communities, frameworks must be widely available, generally agreed upon, and commonly adopted.” he added “As best practices mature, they can be adopted into a formal framework and used for financial industry participants and regulators alike.”

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Author: James W

DTCC Delays Blockchain Post-Trade System To Sidestep Possible Brexit Complications

Brexit is coming up and several companies in the United Kingdom are scared of it. Now, the Depository Trust & Clearing Corporation (DTCC) has recently affirmed that it would postpone the launch of its new post-trade platform for derivatives to avoid any kind of complication with Brexit.

According to the official reports, the delay is actually happening to allow more testing on the platform. Many people know, however, that Brexit is getting close, and that now is a bad time for launches.

On the official side of the story, the company affirmed that the blockchain-based project is progressing pretty well and that the company is only making sure that its product will be 100% ready when it hits the market. Coindesk, however, cited an inside source affirming that Brexit is the actual main reason for the delay.

The initial launch date for the project would be around the time that Brexit happened (if it does, indeed, ever happen, because no one truly knows at this point). With such a drastic change, the whole regulation of the country might suddenly change, which can often be a huge headache and scare investors.

During the announcement of the delay, the company did not provide any kind of exact date for the launch, which is understandable, as it will possibly wait to see what happens after Brexit.

The platform created by the DTCC is known as TIW and it works as a mainframe to cloud solution based on the blockchain. The current version of the product handles $11 trillion of credit derivatives, so the upgrade will certainly be a big deal.

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Author: Silvia A