Post-Trade Financial Services Giant, 15 Major Banks Test DLT Project for Credit Derivatives

Global post-trade market infrastructure giant The Depository Trust & Clearing Corporation (DTCC) is entering the testing phase of its replatformed Trade Information Warehouse (TIW) based on distributed ledger technology (DLT), according to a press release published Nov. 6.

DTCC’s warehouse provides event processing services for around 98 percent of all credit derivatives transactions in the global marketplace. The infrastructure provider is now reportedly working with fifteen of the world’s leading banks to test its new DLT-based restructuring of the warehouse.

While participant banks in DTCC’s 2016 proof-of-concept (PoC) included Bank of America, Citi, Credit Suisse, and JPMorgan, today’s release only explicitly names U.K.-based Barclays alongside 14 unnamed others.

According to the press release, the testing will entail using simulated use cases and trials of the interactions between systems, enterprises, and platforms from other major infrastructure providers such as MarkitSERV, in particular the latter’s new credit platform “TradeServ.”

Lee Braine of the Chief Technology Office at Barclays has said the initiative from DTCC and its collaborators will bring “distributed ledger technology to life in a demonstrable way that will enhance efficiencies and lower costs and risks for the industry.”

The release gives insight into the roles and technology provided by the project’s partners, outlining that a consortium comprised of IBM, Axoni, and R3 have “recoded the functionality” of the warehouse using DLT and cloud services over a period of 18 months.

IBM is reportedly at the helm of the project, providing “program management, DLT expertise, and integration services”; enterprise-focused blockchain startup Axoni is providing DLT infrastructure and smart contract applications built on its AxCore blockchain protocol; and blockchain consortium R3 is acting as a “solution advisor.”

DTCC’s release also indicates the gargantuan scale of the infrastructure provider’s footprint in the global financial industry: as of 2017, DTCC’s subsidiaries “processed securities transactions valued at more than U.S. $1.61 quadrillion,” and that its depository provides custodian and asset servicing solutions from “131 countries and territories valued at U.S. $57.4 trillion.”

It further states that DTCC’s Global Trade Repository service maintains roughly 40 million open over-the counter (OTC) positions weekly, and processes over 1 billion communications monthly via its group of licensed trade repositories.

As reported in October, a recent study led by DTCC found that distributed ledger technology (DLT) is scalable enough to support daily trade volumes of the U.S. equity market. The 19-week study, conducted in collaboration with Accenture and R3, purportedly proved that DLT is capable of supporting an entire trading day’s volume at peak rates, which can hit as high as 115,000,000 daily trades, or 6,300 trades per second for five continuous hours.