The Depository Trust & Clearing Corporation (DTCC) has completed its proof-of-concept for using a distributed ledger-based solution to manage the clearing and settlement of US Treasury, agency, and agency mortgage-backed repurchase agreement (repo) transactions.
Working with Digital Asset, the two companies have demonstrated the successful netting of “start” leg repo transactions with prior end-of-day net securities obligations in the DTCC environment.
With Phase One now complete, DTCC and Digital Asset have progressed to Phase Two, where they will form a Stakeholder Working Group comprised of leading market participants active in the $3 trillion per day US repo and related transaction market to collect independent feedback and ensure the solution is aligned with industry needs.
Phase Two will also determine whether the solution meets the performance and integration needs of DTCC’s technology environment while allowing for integration with member firms. Phase Two is expected to be completed by June 2017 at which time DTCC will determine whether to move ahead with the development phase of the effort.
Michael Bodson, president & CEO of DTCC, comments: “We are very pleased with the results from our repo proof-of-concept effort with Digital Asset, and we see this project as another validation of the potential of this exciting, emerging technology. DLT was chosen because of its real-time information-sharing capabilities, enabling all parties to quickly view repo details after trade execution lowering risks and costs, while enabling users to take advantage of the benefits of a central counterparty. Digital Asset has been a strong partner in this work, and we are excited to move to Phase Two with them.”
Blythe Masters, CEO of Digital Asset, adds: “We are delighted to be working with DTCC towards the first industrial-scale implementation of distributed ledger technology for the $3 trillion per day repo market. As repo volumes continue to grow, Phase Two demonstrates DTCC’s on-going commitment to leveraging DLT for the benefit of their clients, making this one step closer to being a reality.”