DTCC steps up DLT trial for repo transactions
The Depository Trust and Clearing Corporation (DTCC) announced that the proof-of-concept to improve the netting process for repo transactions using distributed ledger technology (DLT) has been successfully completed.
Banking Technology reported that DTCC partnered with Digital Asset Holdings in April last year for the project, which is now moving to phase two where DTCC will form a Stakeholder Working Group to discuss the alignment of the solution to with industry needs.
At present, DTCC is only able to net and settle the close-leg of same-day settling trades. This project allows to net the start-leg, which reduces the settlement risk and costs to members. The DLT-based solution helps DTCC calculate a new net settlement amount at a point in time and record it in an immutable, secure and transparent distributed ledger that can be leveraged for new net securities and cash obligations with its member firms.
Phase two is expected to be completed by June 2017 at which time DTCC will determine whether to move ahead with the development phase of the effort.
“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,” says Michael Bodson, president and chief executive of DTCC.
“DLT was chosen because of its real-time information-sharing capabilities, enabling all parties to quickly view repo details after trade execution lowering risks and costs while enabling users to take advantage of the benefits of a central counterparty.”
By Soumik Roy, editorial contributor to Banking Technology