New DTCC White Paper Calls for Leveraging Distributed Ledger Technology to Solve Certain Long-Standing Operational Challenges

PR63219

NEW YORK, LONDON, HONG KONG and SINGAPORE, Jan. 26, 2016/PRNewswire=KYODO JBN/--

     White paper calls for industry-wide engagement and collaborative

rearchitecture of core processes to avoid siloed solutions based on different

standards

    The Depository Trust & Clearing Corporation (DTCC [http://www.dtcc.com ]),

the premier post-trade market infrastructure for the global financial services

industry, today issued a white paper

[http://www.dtcc.com/~/media/Files/PDFs/DTCC-Embracing-Disruption.pdf ] that

calls for industry-wide collaboration in leveraging distributed ledger

technologies to modernize, streamline and simplify the siloed design of the

financial industry infrastructure and address certain limitations of the

current post-trade process.

    "The industry has a once-in-a-generation opportunity to reimagine and

modernize its infrastructure to resolve long-standing operational challenges,"

said Michael Bodson, President and CEO at DTCC. "To realize the potential of

distributed ledger technology in a responsible manner and to avoid a

disconnected maze of siloed solutions, the industry must work together in a

coordinated fashion."

    The paper, titled "Embracing Disruption - Tapping the Potential of

Distributed Ledgers to Improve the Post-Trade Landscape

[http://www.dtcc.com/~/media/Files/PDFs/DTCC-Embracing-Disruption.pdf ]," notes

that while today's financial market infrastructures have a proven track record

of providing stability,  reliability and certainty, they are often quite

complex, siloed and not equipped for 24/7/365 processing. DTCC believes a

secure distributed ledger, with complete and traceable transaction history for

a set of assets that is shared and accessible only between trusted parties,

could provide significant operational improvements as well as further mitigate

risk and reduce post-trade costs.

    Based on its research and analysis, DTCC recommends exploring targeted

opportunities to improve upon the existing infrastructure in certain defined

areas where automation is limited or non-existent and where the technology

provides a clear benefit over existing processes. Opportunities to explore

include: master data management; asset/securities issuance and servicing;

confirmed asset trades; trade/contract validation, recording and matching for

the more complex asset types that currently do not have strong existent

solutions; netting and clearing; collateral management; and, longer term,

settlement.

    However, the white paper cautions that distributed ledger technology is

still immature and unproven, has inherent scale limitations in its current

form, and lacks underlying infrastructure to cleanly integrate the technology

into the existing financial market environment. As a result, it may not be the

solution to every problem and alternative solutions should also be considered

in evaluating opportunities to lower the costs and risks of current

infrastructure through standardized industry workflows and expanded use of

cloud technologies.

    Industry-Wide Coordination and Collaboration

    The paper also notes that research efforts thus far have been generally

uncoordinated and, as a result, the industry is at risk of repeating the past

and creating countless new siloed solutions based on different standards and

with significant reconciliation challenges. The most logical way forward is for

the existing, regulated and trusted central authorities to help play a leading

role in introducing the standards, governance and technology to support

distributed ledger implementations. Furthermore, we believe these

organizations, working in partnership with a wide range of the industry, can

help ensure that new opportunities are in the best interests of post-trade

processing and consistent with long-standing goals of mitigating risk,

enhancing efficiencies and driving cost efficiencies for market participants.

    "The current approach of many firms experimenting in private with a

technology that uses consensus protocols to provide transparency could lead to

a new post-trade environment with the same integration and reconciliation

problems that companies face today," Bodson said. "As an industry-owned and

governed financial market utility with more than 40 years of service, DTCC is

uniquely positioned to help lead the effort in exploring how distributed ledger

technology can simplify or replace legacy post-trade systems."

    As part of its commitment to progressing distributed ledger technology in

the post-trade space, DTCC recently made a financial investment in Digital

Asset Holdings, LLC [http://digitalasset.com ], a developer of distributed

ledger technology for the financial services industry, and Bodson will sit on

the company's Board of Directors. This investment positions DTCC to play a

leading role in fostering industry-wide collaboration and helping to introduce

the standards, governance and technology to support distributed ledger

implementations.

    DTCC has also joined the Linux Foundation [http://www.linuxfoundation.org

], a nonprofit organization enabling mass innovation through open source, to

support a new venture known as the Hyperledger project, a collaborative effort

to advance the Blockchain technology. This relationship will enable DTCC to

play a leading role in creating the governance and standards for the technology

and ensure it is open source and based on collaboration.

    For more information on distributed ledger technology and updates on DTCC's

progress with this emerging technology, go to http://www.dtcc.com/blockchain.

    About DTCC

    With over 40 years of experience, DTCC is the premier post-trade market

infrastructure for the global financial services industry. From operating

facilities, data centers and offices in 16 countries, DTCC, through its

subsidiaries, automates, centralizes, and standardizes the post-trade

processing of financial transactions, mitigating risk, increasing transparency

and driving efficiency for thousands of broker/dealers, custodian banks and

asset managers worldwide. User owned and industry governed, the firm simplifies

the complexities of clearing, settlement, asset servicing, data management and

information services across asset classes, bringing increased security and

soundness to the financial markets. In 2014, DTCC's subsidiaries processed

securities transactions valued at approximately US$1.6 quadrillion. Its

depository provides custody and asset servicing for securities issues from over

130 countries and territories valued at US$64 trillion. DTCC's global trade

repository maintains approximately 40 million open OTC positions and processes

roughly 280 million messages a week.  To learn more, please visit

http://www.dtcc.com or follow us on Twitter @The_DTCC

[https://twitter.com/the_dtcc ].

     Contacts: Amanda Richter, DTCC +1-813-470-1654, arichter@dtcc.com,

EmptyBreak:MARKER, Emma Cullen-Ward, One Profile, +61-2-8915-9900,

emma@oneprofile.com.au, EmptyBreak:MARKER, Sherman Ko, Ryan Communication,

+852-6101-0487, sherman@ryancommunication.com, EmptyBreak:MARKER, Melissa

Rowling, Greentarget, +44-(0)20-7324-5490, melissa.rowling@greentarget.co.uk,

EmptyBreak:MARKER, Audra Tiner, Articulate Comms, +1-212-255-0080,

atiner@articulatecomms.com

SOURCE: The Depository Trust & Clearing Corporation (DTCC)