The Depository Trust & Clearing Corporation (DTCC) is proceeding with its plan to re-platform its credit derivatives Trade Information Warehouse (TIW) on distributed ledger technology and cloud. Under the project, DTCC has enlisted 15 of the largest global banks for the testing phase. The announcement was made via a press release shared by Nov 06, 2018.
After the announcement of the Chris Childs, CEO of DTCC DerivServ said:
“The transformation of DTCC’s Trade Information Warehouse using a distributed ledger and cloud technology, along with the modernization of MarkitServ’s confirmation system, is truly a ground-breaking effort pushing the boundaries of technology use in the industry.”
The DTCC is a premier post-trade market infrastructure for the global financial services industry. The corporation has offices in 16 countries and through its subsidiaries, helps in automating, centralising and standardising the financial transactions. Also, it increases transparency, mitigates risks while also infusing efficiency for several broker/dealers, asset managers, and custodian banks.
The TIW is very important because it automates the post-trade dynamics of financial service firms. It facilitates lifecycle events, record keeping, and payment management for over $11 trillion of cleared and bilateral credit derivatives.
The Consortium: R3, IBM and Axoni
In early 2017, DTCC invited blockchain consortium R3, IBM and Axoni to help overhaul its post-trade processing of derivatives contracts. DTCC wanted a new platform based on a distributed ledger that would help in slashing of costs. In essence, the corporation wanted to eliminate the need for “disjointed, redundant processing capabilities and the associated reconciliation costs.”
Almost two years later, 15 banks are now ready to conduct end-to-end, structured user acceptance tests on the distributed ledger. The banks will work with simulated use cases and test data during the test period. Also, they will validate the interaction between firms, systems and other vital market infrastructure providers. Notably, they will work with MarkitServ and its new credit platform, TradeServ.
IBM leads the initiative of re-platforming by offering DLT expertise, program management and integration services. R3 is as a solution advisor while Axoni provides the blockchain infrastructure and smart contract applications built on the AxCore blockchain protocol
In the press release, the DTCC praises the initiatives undertaken by the IBM, Axoni, and R3 consortium in improving the functionality of TIW. Particularly, DTCC acknowledges that:
“Since selecting the consortium of IBM, Axoni, and R3, DTCC and its partners have completely recoded the functionality of the TIW, utilizing DLT and the cloud in only 18 months.”
Notably, Barclays Bank was among the 15 banks participating in the testing phase of the project. Lee Braine, chief technology officer, Barclays said:
“We are pleased to be working with DTCC, our partners and colleagues on this exciting project to bring distributed ledger technology to life in a demonstrable way that will enhance efficiencies and lower costs and risks for the industry.”
After the trial phase, other market participants can also participate in open testing and then the system will go live.