Post-trade market infrastructure giant DTCC has initiated the testing phase to re-platform its credit derivatives on distributed ledger technology (DLT) and cloud.
The trial will include the participation of 15 of the world’s largest global banks, which will conduct structured user acceptance tests to validate the interaction between systems, firms and other market infrastructure providers. DTCC plans to go live with the blockchain platform upon completion of the testing phase by Q1 2019.
Trading Industry Giant DTCC Tests Blockchain Version of Credit Derivatives Platform
The Depository Trust & Clearing Corporation (DTCC), an American post-trade financial services company providing clearing and settlement services to the financial markets, has completed the development phase of the blockchain platform for its Trade Information Warehouse (TIW).
The testing phase will begin with 15 large banks conducting the first tests, leveraging simulated use cases and test data and validating the interaction between systems and other providers, such as MarkitSERV and its new platform for credit, DTCC DerivSERV, CEO Chris Childs explained.
“The transformation of DTCC’s Trade Information Warehouse using 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. We are proud to be collaborating with a number of the world’s leading banks, MarkitSERV and all our partners on this exciting initiative to revolutionize the derivative industry’s credit market infrastructure. We look forward to launching the service next year.”
The company, which is responsible for processing securities transactions valued at more than US$1.61 quadrillion in 2017 alone, will count with the participation of Barclays to test the platform.
The bank’s CTO, Lee Braine, expects the project to “enhance efficiencies and lower costs and risks for the industry.” The TIW is DTCC’s golden record for bilateral credit derivatives. The platform performs lifecycle events, payment calculations, and settlement. Through its public reporting across both cleared and uncleared transactions, the TIW provides market transparency to the trading industry.
“The standardized nature of the process flows and data models made credit derivatives an ideal test case for distributed ledger technology. Bolstered by common data standards and governance, a DLT-based TIW service will enable the industry to process and report to regulators from the same data record.”
DTCC has completely recoded the functionality of the TIW using blockchain and the cloud in 18 months in partnership with IBM, which led the initiative with its program management, DLT expertise, and integration services. Axoni, with its blockchain infrastructure and smart contract applications, also worked on the project together with solution advisor R3.
Upon successful completion of the testing phase restricted to 15 banks, the post-trade market infrastructure firm plans to open the trial version to other market participants and service providers by the end of 2018, and then go live with the blockchain platform once testing is completed, by Q1 2019.
Featured image from Shutterstock.
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