DTCC Connection

DTCC’s groundbreaking announcement that it plans to re-platform its Trade Information Warehouse (TIW) service—a credit derivatives swap management system—using distributed ledger technology (DLT), recently received widespread coverage in the global media.

Publications that covered DTCC’s move in derivatives include the New York Times, Forbes, The Economist, Financial Times, Financial News, Reuters, Bloomberg, Wall Street Journal, CoinDesk Daily, TabbForum, Borsen Zeitung, Les Echos, L’Agefi and much more. Here is a sampling of what they had to say about DTCC’s noteworthy initiative.

New York Times

”The company that serves as the back end for much Wall Street trading — the Depository Trust and Clearing Corporation, or D.T.C.C. — said ... that it would replace one of its central databases, used by the largest banks in the world, with new software inspired by Bitcoin. The organization, based in New York, plays a role in recording and reporting nearly every stock and bond trade in the United States, as well as most valuable derivatives trades…The announcement is one of the most advanced steps yet in Wall Street’s continuing effort to harness the technological concepts underlying Bitcoin.”

Forbes

Forbes magazine quoted Mike Bodson, DTCC President and CEO:

“There’s been a lot of hype in the last year and a half about blockchain and distributed ledger technology and how it will revolutionize the financial markets and change post-trade processing. But there’s been no major practical rollout of scale based upon this technology. This will be one of the first globally where we are using distributed ledger technology to become a piece of the infrastructure in a very critical market, in the credit default swaps market, and use it across the entirety of multiple players.”

Coindesk Daily

“The post-trade financial services company (DTCC) has begun the process of moving a significant part of its $1.5 quadrillion worth of transaction workflow to a distributed ledger network.

With a contract announced today, IBM will help manage the process of moving $11 trillion worth of credit derivatives to a custom distributed ledger built by VC-backed startup, Axoni, under the advisement of banking consortium R3CEV.”

The publication also quoted Chris Childs, CEO, DTCC Deriv/SERV:

“We believe our own internal savings will cost-justify the project. There are additional savings to the industry ... the estimates vary from one institution to another."

Reuters

“The project is one of the largest implementations of the nascent technology in mainstream financial markets to have been made public to date. Blockchain is a shared record of transactions maintained by a network of computers on the internet.

The project is being developed with input from market participants and infrastructure providers including Barclays Plc, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co, UBS Group AG, Wells Fargo & Co, IHS Markit Ltd and Intercontinental Exchange Inc, DTCC said.

Blockchain will reduce the costs and complexity of managing credit default swaps, which are essentially contracts that insure bond-holders against losses if the bond goes bad.”

TabbFORUM

“DTCC has selected IBM, in partnership with Axoni and R3, to provide a distributed ledger technology (DLT) framework to drive further improvements in derivatives post-trade lifecycle events. The firms will work collaboratively to re-platform DTCC’s trade information warehouse (TIW) with the aim of developing a DLT offering for post-trade processing based on current TIW capabilities and interfaces with technology providers and market participants. The resulting offering aims to streamline derivatives processing across the industry by eliminating the need for disjointed and redundant processing capabilities as well as reconciliation costs.”