DTCC has successfully completed the PoC of its Ion blockchain solution to reduce settlement time for securities transactions. If approved by regulators, the solution will be launched in 2022.
As reported by Ledger Insights, the Depository Trust and Clearing Corporation (DTCC), which provides infrastructure for the financial markets, has tested a proof of concept (PoC) for its solution on the Ion blockchain. As part of the project, the financial giant explored the possibility of using blockchain to create an alternative to existing settlement services.
“Cryptocurrency, digital assets, DLT and other innovations are increasingly becoming an integral part of the emerging financial services industry, and we are very excited about future opportunities in each of these areas,” said Murray Pozmanter, Head of Clearing and Global Business Operations at DTCC. Pozmanter).
In May, DTCC announced that it is working on projects involving the use of blockchain to speed up the processing of securities transactions. Successful testing of the Ion solution opens the door to a launch in Q1 2022, subject to regulatory approval, the company said in a recent statement.
“Project Ion has demonstrated that T + 1 or T + 0 computing are effective use cases for DLT, and we look forward to working with our customers and industry to launch a new platform.”
Now settlements on shares are carried out in the T + 2 mode – within two days. This creates counterparty, credit and default risks if the company experiences financial difficulties during this two-day window. The Ion solution was designed for T + 0 settlements, but also supports T + 1 and T + 2.
DTCC will provide T + 1 settlement on its classic systems, but offers a DLT-based Ion solution for those looking to “prepare their firms for a new operating model.” Initially, the solution will not be available for all transactions – Ion will only support limited two-way transactions and work in parallel with existing systems. In fact, transactions will be carried over from the DLT platform to the current DTCC system.
But this is only the first phase. The next goal of the company is to allow customers to host nodes on the DLT network and expand the types of transactions. This is not the only DTCC project related to blockchain. The company is also working to update its Trade Information Warehouse derivatives settlement platform.
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