Michael Bodson, President and CEO, welcomes panelists and attendees at a recent blockchain forum hosted by DTCC in the Capitol Visitors Center.
The Depository Trust & Clearing Corporation (DTCC) has not only embraced the potential disruption that blockchain or distributed ledger technology (DLT) could bring to the post-trade process, but it has also welcomed the role of educator for this emerging technology that holds much promise.
That was evident on June 20, when DTCC Government Relations hosted an event in Washington D.C. titled, “The Blockchain Disruption: Harnessing the Potential of Financial Technology.” The meeting brought together Capitol Hill and regulatory staff, as well as key stakeholders in the financial services industry. The 70 attendees filled the Capitol Visitor Center to capacity.
In recent months, DTCC Government Relations has maintained an ongoing dialogue with regulators and members of Congress to determine how DLT can be used in a meaningful way to reduce risk, costs and increase efficiencies in post-trade processing. In addition, DTCC has been working to educate and engage lawmakers and regulators on the advances made in DLT, highlighting the significant progress it has made on several industry proofs of concept, including initiatives related to repurchase agreements and credit default swaps.
During his opening remarks, Mike Bodson, DTCC President and CEO, provided a brief overview of the financial markets and explained how DTCC is uniquely positioned to help change the marketplace by leveraging financial technology.
“Given our unique vantage point, we can say with certainty that the fintech revolution—including blockchain—is here,” he said. “Therefore, market participants and policymakers need to be prepared to take advantage of the positive impacts the technology can deliver, while, at the same time, strengthening the structure of investor protections that have been built over the past 70 years.”
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Highlighting the importance of collaboration within the industry, Bodson said it was necessary for stakeholders to work together to develop common standards and a consistent governance model to realize DLT’s benefits. Without collaboration and unified standards and governance, the industry faces recreating the same siloed nature of today’s post-trade infrastructure—only with newer technology.
“Existing regulated and trusted authorities, like DTCC, should play a leading role in introducing the standards, governance and technology,” Bodson said.
Bodson also discussed DTCC’s role to help educate regulators and other government stakeholders because “the industry and policymakers must be prepared for this innovation.” One benefit of blockchain could be deeper insight into markets and risk. But understanding how this fledgling technology fits into the regulatory framework will be “critical to answering how the industry incorporates blockchain,” he added,
“We hope today’s discussion helps to advance our collective understanding on blockchain and its potential impact on financial services,” Bodson said. “We look forward to serving as a resource to you and your offices on distributed ledgers as you continue to learn about this technology.”
Mark Wetjen, DTCC Managing Director and Head of Global Public Policy, moderated the session that followed Bodson’s opening remarks. Panelists included Chris Church, CBDO, Digital Asset Holdings, Gary Goldsholle, Deputy Director in the Division of Trading and Markets, SEC, Jennifer Peve, Executive Director, Office of FinTech Strategy, DTCC, and Greg Schvey CEO, Axoni.
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Panelists discussed how regulators will need to react to DLT and the other public policy questions it raises, including a debate on the pros and cons of open public blockchain networks versus private ones. The group explored the policy implications raised by these two different types of networks. Wetjen stressed the importance of ensuring that decision makers in Washington D.C. have the knowledge necessary to make informed decisions as DLT continues to develop and before it is deployed.
“It is important that we engage policy makers and regulators from the beginning of this process,” Wetjen said. “New technologies are creating tremendous opportunities to connect economies around the world, make markets safer and more efficient and deliver services to consumers in novel ways. It is our responsibility to ensure Members of Congress, their staff, and regulators have the knowledge and tools to appropriately react to the changes in the industry.”