Over the past two years, distributed ledger technology (DLT) has gained widespread attention in financial services because of its potential to modernize the post-trade environment in areas like clearance, settlement and payments.
While distributed ledger technology has moved beyond the hype, the technology needs to be proven before it can be widely adopted or considered enterprise-ready.
Jennifer Peve, DTCC, Executive Director, Office of Fintech Strategy, identifies three priorities the financial industry is working to address to make DLT implementations in critical sectors a reality.
1. Demonstrating scalability and high transaction throughput
DTCC processes approximately 1.5 million settlement-related transactions per day. That means that any enterprise-ready distributed ledger we employ must handle a minimum of 1.5 million transactions daily, and have the flexibility to handle increased volumes and support the throughput needed. A critical component of our DLT platform evaluation includes pressure-testing high transaction processing volumes and benchmarking against production results to make sure that it meets or exceeds current standards.
2. Enterprise development of smart contracts
Smart contracts are distributed computer protocols intended to facilitate, verify, or enforce the negotiation or performance of a contract. Different technology platforms use different programming languages for their smart contract development. At this early stage of smart contract development, it is important to consider how and if our clients are preparing themselves to consume and support various programming languages. Due diligence at this stage will impact the adoption rate of our solutions.
3. Interoperability between co-existing ledgers and legacy infrastructure
The industry is exploring and advancing use cases with a variety of technology providers, DLT platforms and software solutions. To realize the potential of DLT, we must determine how multiple ledgers will integrate, not only with other ledgers, but also with legacy infrastructure. DTCC supports collaboration across the industry in pursuit of the long-term goal of establishing standards and achieving interoperability across ledgers.