It’s
unclear whether the latter platform ever actually appeared or if the initiative
was rolled into the larger project of retooling the DTCC’s TIW platform using
distributed ledger technology. Either way, what is clear based on the DTCC’s
latest blockchain-related announcement is that TIW is now undergoing
“end-to-end, structured user acceptance tests."
The DTCC
expects to complete these tests by the end of Q1 2019 and to then take the
platform live.
Fifteen
of the “world’s largest global banks” are participating in the testing,
according to the DTCC’s statement. The DTCC has not publicly identified those
banks, but Barclays is one of them. Lee Braine, who works at the CTO office at
Barclays, said in a statement that his company is excited “to bring distributed
ledger technology to life in a demonstrable way that will enhance efficiencies
and lower costs and risks for the industry.”
(In an earlier announcement regarding its blockchain initiative,
the DTCC identified Barclays, Citi, Credit Suisse, Deutsche Bank, J.P. Morgan,
UBS and Wells Fargo as banks that were providing input on the project. It’s
unclear, however, whether all of these banks are also participating in the
platform testing announced this month.)
Real-World,
Blockchain-Based Finance Systems
Placing a
blockchain-powered financial processing platform into private testing is not
exactly groundbreaking news. What will be most interesting is to see such a
platform actually deployed into the wild for general-purpose use.
Still,
given the disparity between the number of grandiose plans for applying
decentralized technology to the finance industry and the number of ideas that
have been or are in the process of being implemented, the DTCC’s recent
announcement is a big deal. It’s proof that at least some of the predictions
about how blockchains will radically change finance are on the path to becoming
true.
Also
notable is the fact that the DTCC is no marginal or small-time player in the
finance industry. The New York–based company handles the majority of securities
transactions in the United States, as well as a good chunk of those that take
place worldwide. Its TIW platform processes $11 trillion worth of derivatives
annually. Thus, the DTCC’s embrace of blockchain technology as a way to improve
financial trading represents a major example of an established, very
influential financial company taking decentralization seriously — not just
another fintech startup working to disrupt industry giants via a distributed
ledger.
The DTCC
has been mostly tight-lipped about how, exactly, distributed ledger technology
factors into the new version of the TIW platform that it is now testing.
However, given that the platform serves in part to store and
manage contracts for financial securities trades, it seems a safe bet that the
company’s goal is to store those contracts on a distributed ledger, where
information will be more reliable and more accessible to stakeholders. We
presume that the platform is using a permissioned blockchain deployed by Axoni,
which was set to “provide distributed ledger infrastructure and smart contract
applications,” according to an early 2017 statement from the DTCC.
Interestingly,
R3’s role in the effort is to serve only as a “solution advisor,” according to
the same statement, even though R3 also offers blockchain infrastructure and,
in that sense, competes with Axoni. The DTCC has managed to partner with both
blockchain providers, though it apparently chose Axoni to build the actual
infrastructure for its new TIW solution.
The
bottom line: given the DTCC’s stature within the finance industry, its
blockchain-powered TIW platform could be a very big deal. We’ll keep our eyes
peeled in 2019 for signs that the solution is moving beyond testing and into
the real world.
