The Depository Trust & Clearing Corporation (DTCC), the post-trade market infrastructure for the global financial services industry, today announced a digital collateral management platform.
Collateral is an essential risk mitigation tool “that helps support overall financial stability.”
DTCC also noted that as the markets grow “more complex and cost pressures rise, the demand for high quality collateral increases.”
Blockchains present a significant opportunity to “streamline the flow of collateral across siloed infrastructure, unlocking major capital and operational efficiencies.”
The new AppChain-based approach demonstrates the power of tokenized collateral management to:
- Increase the mobility and velocity of collateral movement globally,
- Increase capital efficiencies and liquidity for all participants,
- Facilitate the convergence of traditional and digital assets, and
- Enable an open digital liquidity ecosystem for market participants to deploy digital applications that enhance collateral operations.
The collateral management platform is “an application on the DTCC AppChain, built atop LF Decentralized Trust’s Besu blockchain.”
The DTCC AppChain offers greater control “over privacy, security, and data and uses DTCC ComposerX.”
DTCC is giving their participants “a digital financial infrastructure to help navigate the fragmented data landscape that spans traditional and digital networks.”
The platform leverages a scalable, industry-driven framework “rooted in open architecture and common standards.”
Nadine Chakar, Global Head of DTCC Digital Assets said:
“Our goal is to highlight how we can enable real-world, institutional-grade digital collateral market infrastructure. This platform is unique in that we’ve created something that’s more open, flexible, dynamic, and comprehensive than any previous digital collateral initiative.”
Chakar added:
“We plan to continue building on this collateral model, engaging with the industry and our regulators to develop the standard for tokenized collateral across global jurisdictions, working with the buy-side to give them more direct market access, and laying out the regulatory and legal path to implementation.”
Dan Doney, Chief Technology Officer of DTCC Digital Assets said:
“Collateral mobility is the ‘killer app’ for institutional use of blockchain – we’ve pulled together a coalition of technologists and market participants to successfully showcase how the speed and openness of this technology can safely and reliably unlock liquidity in traditional markets at scale. By using smart contracts to automate the full range of collateral operations, we enable complex trade execution across markets in real-time at any time, even in volatile conditions.”
With more than 50 years of experience, DTCC notes that it is the “post-trade market infrastructure for the global financial services industry.”
From 20 locations around the world, DTCC, through its subsidiaries, automates, centralizes, and standardizes the “processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers.”
Industry owned and governed, the firm innovates purposefully, simplifying the complexities of “clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem.”
In 2023, DTCC’s subsidiaries processed securities transactions valued at U.S. $3 quadrillion and its depository subsidiary reportedly provided “custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $85 trillion.”
DTCC’s Global Trade Repository service, “through locally registered, licensed, or approved trade repositories, processes more than 20 billion messages annually.”