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Post-trade financial services company has announced it will soon start developing new blockchain-based platform for processing credit default swaps.
The Depository Trust & Clearing Corporation (DTCC) is planning to rebuild its Trade Information Warehouse service using the distributed ledger technology. DTCC has selected IBM and blockchain companies, R3 and Axoni, to collaboratively develop the software for post-trade processing.
Currently, Trade Information Warehouse is used by 2,500 countries around the world and processes $11 trillion worth of cleared and bilateral credit derivatives.
The project is by far the major step forward in Wall Street’s effort to leverage the benefits of the technology underpinning cryptocurrency.
The new solution will allow DTCC to streamline and minimize the costs of processing derivatives. It has already had input from Barclays, Credit Suisse, Deutsche Bank, JP Morgan, UBS, Citi, Walls Fargo, and infrastructure providers IHS Markit and Intercontinental Exchange, among others.
DTCC said the development is set to start this month and build on AxCore distributed ledger protocol created by Axoni, which raised $18 million last month. The startup will submit the protocol to Hyperledger after the launch. The platform is set to go live in early 2018, the organization noted.
IBM will lead the initiative and provide DLT expertise, program management, and integration services, while Axoni will offer distributed ledger infrastructure. Meantime, R3, which released an open source of its own blockchain platform Corda in November, will serve as a solution advisor.
“IBM, Axoni and R3 offer valued DLT expertise as well as a strong commitment to the Hyperledger community and industry standards,” said Chris Childs, CEO of DTCC Deriv/SERV. “We are pleased that they have chosen to leverage their collective expertise and collaborate with us on this initiative, which will allow us to build the best solution for the marketplace while minimizing cost to the industry and expediting our speed to market.”
Greg Schvey, CEO of Axoni, said: “Deploying distributed ledger technology in production at this scale is a watershed moment for the industry. The combination of technology and business expertise being contributed to this project from across the participating firms is unparalleled and the benefits are clear. We look forward to working with DTCC and the project partners to bring those benefits to the market.”
Bridget Van Kralingen, Senior Vice President of IBM Industry Platforms, said: “As one of the largest and most groundbreaking distributed ledger projects to date in the financial services industry, DTCC together with its member banks are reimagining the credit derivatives process. The combined expertise of IBM and our partners enables us to provide DTCC with a resilient, open and innovative new technology platform to support this groundbreaking opportunity.”
IBM, which provides businesses with blockchain solutions, unveiled earlier this month that it will form a new blockchain consortium that will help to improve the global cotton industry.