[ 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