CLS and IBM have announced a collaboration on a proof of concept (PoC) for LedgerConnect − a distributed ledger technology (DLT) platform for the financial services industry designed to enable sell and buy side firms, FinTechs and software vendors to deploy, share and consume services hosted on a shared distributed ledger network.
The companies say that on the new initiative financial institutions will be able to access services in areas such as, but not limited to, know your customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data. By hosting these services on a single, enterprise-grade network, organisations can focus on business objectives rather than application development, enabling them to realise operational efficiencies and cost savings across asset classes, the two firms claim.
Nine financial institutions, including Barclays and Citi, are participating in the PoC and have selected services from a number of vendors including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems to participate in the PoC.
CLS and IBM add that as financial institutions increasingly work to implement DLT into their operations, capital markets remain “saturated” with multiple systems performing the same business functions and with siloed pockets of data that require expensive reconciliation processes. “DLT can help reduce these inefficiencies and improve the speed of doing business by providing a single, shared version of events and one implementation of common business functions,” they say.
The two firms do point out, however, that it can be cost prohibitive and time-consuming for each vendor, bank, or consortium to create and operate its own unique DLT infrastructure for multiple services when proven technology already exists. “LedgerConnect aims to solve this problem by providing a single shared and highly secured network on which multiple services can be deployed and consumed,” the companies say in a release. “This allows financial institutions to focus on transforming business processes rather than creating multiple new blockchain applications, networks and services in silos that could lead to increased interoperability costs and complexity.”
Operating on a private permissioned network based on the IBM Blockchain Platform and Hyperledger Fabric technology, LedgerConnect will be designed for regulated and security-conscious enterprises and available across asset classes. Support for additional ledger technologies may be provided in the future, based on market demand and developments, the companies say.
“LedgerConnect is part of CLS’s strategy to explore how we can provide safe and robust solutions that create efficiencies and reduce risk for a diverse range of firms operating in the financial markets,” says Alan Marquard, chief strategy and development officer at the firm. “We expect LedgerConnect to deliver enhanced efficiencies and economies of scale over single-purpose distributed ledger networks.”
Marie Wieck, general manager, IBM Blockchain, adds, “Together IBM and CLS have been early pioneers in advancing blockchain solutions for the financial services space. Building on the success of CLSNet and leveraging the strong relationship CLS has with the world’s leading financial institutions, LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value added services for blockchain networks.”
The firms say that on completion of a successful PoC, generation of market demand, and receipt of all necessary regulatory approvals, CLS and IBM plan to make the platform widely available to the industry.