Embracing disruption to tap $11tn with Blockchain Tech for a better post-trade business.

January 11, 2017

Streamline, automate, and reduce the cost of derivatives processing by eliminating disjointed, redundant processing and the associated reconciliation costs with the Depository Trust & Clearing Corporation (DTCC). The premier post-trade market infrastructure for the global financial services industry calls for industry-wide collaboration in leveraging distributed ledger technologies to modernize, streamline and simplify the siloed design of the financial industry infrastructure.

Business case for faster post-trade processing

It is important to understand the reasons for making the clearing and settlement processes faster and more efficient. More efficient and faster post-trade processing could enable faster recirculation of the capital back to the markets (otherwise tied up in the T+3 post-trade cycles today) and could reduce counterparty risks and thus, also reduce margin/collateral requirements. All these processing efficiency gains could further enable reduction of overall trading fees and enable increased order flow and liquidity.

These benefits seem attractive enough that many capital market players are taking a serious look at the potential for using promising blockchain distributed ledger platforms as the potential base for the next generation of post-trade processing.

Post Trade Processing can explore distributed ledger initiatives in:

  • Master data management
  • Asset/securities issuance and servicing
  • Confirmed asset trades
  • Trade/contract validation, recording and matching for the more complex asset types that currently do not have strong, existent solutions
  • Netting and clearing
  • Collateral management
  • Settlement

DTCC to Implement Blockchain Technology  

DTCC is a leading firm offering back-end trading services to many Wall Street companies. To start with, DTCC will be replacing one of its central databases with distributed ledger.

The acceptance of Blockchain technology is driven by both cost benefits and increasing competition from the mainstream cryptocurrency industry. The banking and financial institutions woke up to the possibility of using blockchain technology after they felt that the growth of Bitcoin may threaten their business. By implementing blockchain technology into their existing operations, they will not only be able to offer services at the same speed as Bitcoin transactions but also reduce the overhead costs by including automation and eliminating third party fees.

DTCC is not the first trading infrastructure provider to consider the use of blockchain technology.

In the case of DTCC, the platform will not be using Bitcoin blockchain, but a distributed ledger which shares similarities with the blockchain. If the trial turns out to be successful, DTCC may also consider using the technology for fund transfers in addition to record keeping operations.

The increasing interest among large corporations in Blockchain technology will soon drive more businesses to do the same. This will eventually end up making distributed ledger technology, an industry standard.

The Anglo African team can assist you in unlocking the full potential of FinTech for the prosper of your business. If you have any queries, or if you would like further information, please contact us on 2331636 or by e-mail at contact@infosystems.mu.

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