DTCC Moves to Next Stage of Digital Asset Blockchain Trial

Stan Higgins
Feb 27, 2017 at 13:59 UTC
Updated Feb 27, 2017 at 16:58 UTC
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The Depository Trust & Clearing Corporation (DTCC) has completed the first leg of a post-trade distributed ledger trial conducted in partnership with startup Digital Asset Holdings.

The DTCC, which oversees the clearing and settlement of more than $1qn in US securities each year, said that it would look to expand the trial – which focused on the netting process for US Treasury and agency repurchase agreement transactions – by including more parties in the next planned phase.

As part of that step, DTCC and Digital Asset will convene a Stakeholder Working Group dedicated to this purpose. There, the two firms will solicit feedback on the technology, with an eye to use that input to inform the development process.

In statements, DTCC struck a bullish tone about the future prospects of its blockchain work.

Michael Bodson, president and CEO of the company, said of the trial:

“We are very pleased with the results from our repo proof-of-concept effort with Digital Asset, and we see this project as another validation of the potential of this exciting, emerging technology.”

The firm is projecting a completion date for its second test phase by June, and from there, it will assess whether to push ahead and develop the repo transaction solution further.

DTCC and Digital Asset have been working collaboratively since early last year on post-trade applications, and the securities settlement giant has partnered with a number of blockchain startups with the aim of potentially transforming how it handles transactions.

As reported by CoinDesk last March, the first phase of the trial saw the two firms working to ensure that its processes could operate on a multi-mode blockchain while integrating with existing internal processing systems.

The DTCC will now migrate its “start” leg of same day trades to a blockchain system.

“While DTCC’s Fixed Income Clearing Corporation (FICC) currently provides the matching and verification of repo transactions, only the ‘close’ leg of same-day settling trades is netted and settled by FICC with the ‘start’ leg settling outside of the system. With this project, DTCC seeks to also net the ‘start’ leg, further reducing settlement risk and costs to members by allowing additional netting and offsets,” a release said.

The DTCC is also working with firms like R3 and Axoni on distributed ledger use cases.

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