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DTCC eyes derivatives system on blockchain

09 January 2017

US clearing giant said it plans to deliver the new post-trade system in 2018

Read more: DTCC. blockchain derivatives

The Depository Trust and Clearing Corporation (DTCC) plans to develop a blockchain-based post-trade framework for derivatives with tech firms R3, IBM and Axoni starting this month.

The US-based clearing giant aims to replace the technology underpinning its Trade Information Warehouse database with a distributed ledger. 

The database currently automates the record keeping, lifecycle events, and payment management for more than $11trn of cleared and bilateral credit derivatives. 

Development on the technology is to begin in January and is expected to go live in early 2018.

"IBM, Axoni and R3 offer valued distributed ledger technology expertise as well as a strong commitment to the Hyperledger community and industry standards," Chris Childs, chief executive officer of DTCC Deriv/SERV, said in a statement.

"We are pleased that they have chosen to leverage their collective expertise and collaborate with us on this initiative, which will allow us to build the best solution for the marketplace while minimising cost to the industry and expediting our speed to market."

According to the DTCC, the new technology should further streamline, automate and reduce costs for derivatives processing. The development will be led by computing giant IBM, infrastructure will be provided by Axoni and R3 in an advisory role.

The project has been developed with input and guidance from a number of market participants including Barclays, Citi, Credit Suisse, Deutsche Bank, JP Morgan, UBS and Wells Fargo, and infrastructure providers IHS Markit and Intercontinental Exchange. 

The news follows the completion of a proof of concept for single name credit default swaps on a blockchain, which the DTCC conducted with Bank of America Merrill Lynch, Citi, Credit Suisse, JP Morgan and Markit.

According to a survey by consultancy firm Synechron, developing blockchain-based technology remains as priority for the coming year, with more than a third of financial firms concerned about the lack of expertise in the technology.

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