Global banks could save as much as $20 billion a year when the Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, shifts to a blockchain based distributed ledger.
The DTCC announced this week that IBM, Axoni and R3, will provide a distributed ledger technology (“DLT”) framework to improve derivatives post-trade lifecycle events.
The parties will work collaboratively to re-platform DTCC’s Trade Information Warehouse (“TIW”), building a derivatives distributed ledger solution for post-trade processing based on existing TIW capabilities and interfaces with technology providers and market participants, according to a statement announcing the deal.
The existing DTCC Trade Information Warehouse service currently automates the record keeping, lifecycle events, and payment management for more than $11 trillion of cleared and bilateral credit derivatives. A study by Santander found savings to banks from such a system could be as high at $20B, according to a report in CoinDesk.
In its statement, the DTCC said, “The solution will enable DTCC and its clients to further streamline, automate and reduce the cost of derivatives processing across the industry by eliminating the need for disjointed, redundant processing capabilities and the associated reconciliation costs.”
Companies such as Barclays, Citi, Credit Suisse, Deutsche Bank, J.P. Morgan, UBS and Wells Fargo, and key market infrastructure providers, IHS Markit and Intercontinental Exchange have also all contributed to the planning.
Development will likely start this month building on Axoni’s AxCore distributed ledger protocol. This will be submitted to Hyperledger – an open source collaboration project hosted by the Linux Foundation – when the solution goes live, anticipated in early 2018.
According to Bridget Van Kralingen, Senior Vice President, IBM Industry Platforms,, “As one of the largest and most groundbreaking distributed ledger projects to date in the financial services industry, DTCC together with its member banks are reimagining the credit derivatives process. The combined expertise of IBM and our partners enables us to provide DTCC with a resilient, open and innovative new technology platform to support this groundbreaking opportunity.”