Proof-of-concept complete for US repo netting DLT
28 February 2017 New York
Image: Shutterstock
The Depository Trust & Clearing Corporation (DTCC), in partnership with distributed ledger technology developer Digital Asset, is preparing to embark on the second phase of constructing its repo netting blockchain solution.
DTCC previously produced a proof-of-concept, which it claims demonstrates the first successful netting of start leg of repo transactions with prior end-of-day net securities obligations.
The second phase involves forming a stakeholder working group comprised of active US repo and related transaction market participants to collect independent feedback and ensure the solution is aligned with industry needs.
This phase is expected to be completed by June 2017, at which time the development phase may begin if the latest feedback proves positive.
DTCC explained that the new distributed ledger technology solution would allow it to claim control of the netting process throughout the transaction chain, as the first leg is currently settling outside of the system.
The close leg is already netted and settled by DTCC’s Fixed Income Clearing Corporation (FICC), which provides the matching and verification of repo transactions for same-day settling trades.
Upon completion, the solution aims to allow DTCC to calculate a new net settlement amount at a point in time and record it in an immutable, secure and transparent distributed ledger that can be leveraged by FICC for new net securities and cash obligations with its member firms.
Blythe Masters, CEO of Digital Asset, said: “We are delighted to be working with DTCC towards the first industrial-scale implementation of distributed ledger technology for the $3 trillion per day repo market.”
“As repo volumes continue to grow, phase two demonstrates DTCC’s ongoing commitment to leveraging DLT for the benefit of their clients, making this one step closer to being a reality.”
Michael Bodson, president and CEO of DTCC, commented: “We are very pleased with the results from our repo proof-of-concept effort with Digital Asset, and we see this project as another validation of the potential of this exciting, emerging technology.”
“DLT was chosen because of its real-time information-sharing capabilities, enabling all parties to quickly view repo details after trade execution lowering risks and costs while enabling users to take advantage of the benefits of a central counterparty.”
DTCC and Digital Asset value the US repo market at $3 trillion per day.
DTCC previously produced a proof-of-concept, which it claims demonstrates the first successful netting of start leg of repo transactions with prior end-of-day net securities obligations.
The second phase involves forming a stakeholder working group comprised of active US repo and related transaction market participants to collect independent feedback and ensure the solution is aligned with industry needs.
This phase is expected to be completed by June 2017, at which time the development phase may begin if the latest feedback proves positive.
DTCC explained that the new distributed ledger technology solution would allow it to claim control of the netting process throughout the transaction chain, as the first leg is currently settling outside of the system.
The close leg is already netted and settled by DTCC’s Fixed Income Clearing Corporation (FICC), which provides the matching and verification of repo transactions for same-day settling trades.
Upon completion, the solution aims to allow DTCC to calculate a new net settlement amount at a point in time and record it in an immutable, secure and transparent distributed ledger that can be leveraged by FICC for new net securities and cash obligations with its member firms.
Blythe Masters, CEO of Digital Asset, said: “We are delighted to be working with DTCC towards the first industrial-scale implementation of distributed ledger technology for the $3 trillion per day repo market.”
“As repo volumes continue to grow, phase two demonstrates DTCC’s ongoing commitment to leveraging DLT for the benefit of their clients, making this one step closer to being a reality.”
Michael Bodson, president and CEO of DTCC, commented: “We are very pleased with the results from our repo proof-of-concept effort with Digital Asset, and we see this project as another validation of the potential of this exciting, emerging technology.”
“DLT was chosen because of its real-time information-sharing capabilities, enabling all parties to quickly view repo details after trade execution lowering risks and costs while enabling users to take advantage of the benefits of a central counterparty.”
DTCC and Digital Asset value the US repo market at $3 trillion per day.
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