[ I N- D E P T H | B L O C K C H A I N ]
“ One area in which blockchain seems promising is voting rights and annual general meetings— as it is a well-defined problem with limited automation today, there is a potential business case to apply blockchain to these processes,” says Chan.“ It will be interesting to see how this solution will evolve. With regards to posttrade processes the same applies, if there is a problem to solve and a business case for it, blockchain might be the solution.” The Depository Trust and Clearing sion, DTCC remains confident that the implementation of DLT should boost efficiencies. According to Jennifer Peve, DTCC managing director of solutions business development and the office of FinTech strategy, DLT has the potential to address the limitations of existing post-trade processes by streamlining and simplifying the siloed design of the financial industry’ s infrastructure.“ There are several key features that make this technology a potentially attractive option to improve existing processes, including the fact that standard rules exist for securities transaction validation and replication, immutable linkage to transaction history and auditability,” says Peve.
ASX ' s pathway for the replacement of CHESS
Develop a prototype platform using DLT technology
Formal gathering of business requirements for a replacement system – to perform all current core functions of CHESS, with limited introduction of new features initially
Build out the prototype to an‘ industrial scale’ platform using DLT technology
January 2016 – July 2016 Commenced August 2016 End-2017
Corporation( DTCC) has been looking at using blockchain for specific parts of its post-trade business for some time now. DTCC announced last year that it was working to build a DLT solution for its credit derivatives post-trade processing business based on its existing Trade Information Warehouse( TIW) capabilities. The initiative, one of the industry’ s largest and most complex DLT moves to date, had been expected to launch in early 2018. However, this has now been put back to 2019. The delay is related to increased testing and development of the project— implementation of nascent technologies cannot be rushed, by all accounts. Yet, despite the time exten-
But it is not a panacea. While at a conceptual level, the function of netting and clearing could be carried out using DLT, the cost and risk considerations of the ledger model need to be balanced against the existing efficiencies of current infrastructure, which for many is highly robust and cost-efficient, says Peve. Indeed, the application of blockchain technology to clearing and settlement will need to mature in order to meet the requisite volume demands and efficiencies delivered by the current model, she adds. EuroCCP’ s Chan agrees and says there is a long way to go before blockchain becomes universally adopted in the clearing and settlement world.“ It is not likely to become the go-to solution for clearing and settlement in the foreseeable future,” she says. ASX’ s trailblazing venture— and indeed DTCC’ s when it is completed— appears to be more relevant to help larger clearing intermediaries looking to streamline post-trade processing right now, if not all the way to settlement. Kandula says that progress
14 Global Custodian Summer 2018