The Depository Trust & Clearing Corporation (DTCC), the post-trade market infrastructure for the global financial services industry, is launching a new digital collateral management platform.
Through the launch, the DTCC aims to leverage blockchain technology to streamline the flow of collateral across siloed infrastructure, unlocking major capital and operational efficiencies.
Collateral is an essential risk mitigation tool that helps support overall financial stability. But as the markets grow more complex and cost pressures rise, so too does the demand for high-quality collateral.
DTCC plans to demo the new platform in a live event, titled the ‘Great Collateral Experiment’, on 23 April, and becomes the first industry demonstration developed on DTCC’s digital ecosystem that launched last October – DTCC Digital Launchpad.
The new AppChain-based approach demonstrates the power of tokenised collateral management to:
- Increase the mobility and velocity of collateral movement globally
- Increase capital efficiencies and liquidity for all participants
- Facilitate the convergence of traditional and digital assets
- Enable an open digital liquidity ecosystem for market participants to deploy digital applications that enhance collateral operations
“Our goal is to highlight how we can enable real-world, institutional-grade digital collateral market infrastructure,” explained Nadine Chakar, global head of DTCC Digital Assets. “This platform is unique in that we’ve created something that’s more open, flexible, dynamic, and comprehensive than any previous digital collateral initiative.
“Our work does not stop today. We plan to continue building on this collateral model, engaging with the industry and our regulators to develop the standard for tokenised collateral across global jurisdictions, working with the buy-side to give them more direct market access, and laying out the regulatory and legal path to implementation.”
Heading
The collateral management platform is an application on the DTCC AppChain, built atop LF Decentralized Trust’s Besu blockchain. The DTCC AppChain aims to offer greater control over privacy, security, and data and uses DTCC ComposerX.
DTCC is offering its participants access to new digital financial infrastructure to help navigate the fragmented data landscape that spans traditional and digital networks. The platform leverages a scalable, industry-driven framework rooted in open architecture and common standards.
“Collateral mobility is the ‘killer app’ for institutional use of blockchain – we’ve pulled together a coalition of technologists and market participants to successfully showcase how the speed and openness of this technology can safely and reliably unlock liquidity in traditional markets at scale,” added Dan Doney, CTO of DTCC Digital Assets. “By using smart contracts to automate the full range of collateral operations, we enable complex trade execution across markets in real-time at any time, even in volatile conditions.”
