DTCC to begin development of DLT-based settlement system

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DTCC to begin development of DLT-based settlement system

The Depository Turst and Clearing Corporation is to move into the development phase of a protytpe settlement platform based on distributed ledger technology that could act as the precursor to a US move to a same day settlement cycle

The US-based depository first mooted the idea, dubbed Project Ion, back in May last year.

With six months of testing of the proof of concept now complete, DTCC says it has the quantitative data and qualitative feedback to build out a production-ready workflow and a roadmap for future full industry integration and adoption.

The first phase of the Project Ion platform will support bilateral deliver order transactions that will be initiated by pilot participants through client nodes hosted by DTCC. Once launched, the transactions will be processed through the Project Ion platform and then passed to DTC’s existing systems for settlement processing.

The platform is anticipated to be launched in the first quarter of 2022, and will serve as a parallel book and infrastructure for limited bilateral transactions on DLT, with DTC’s existing systems continuing to remain the authoritative source of transactions.

“Cryptocurrency, digitised assets, DLT and other innovations increasingly are integral parts of the evolving financial services industry, and we are excited about the future opportunity in each of these areas,” states Murray Pozmanter, head of clearing agency services and global business Ooperations at DTCC. “Project Ion has demonstrated that settlement in a T+1 or T+0 environment are effective use cases for DLT, and we look forward to working with our clients and the industry to launch the new platform.”

Project Ion’s functionality will be introduced in a staged rollout, he says, with future phases expected to realise the reconciliation efficiencies offered by DLT. Other phases are anticipated to include the provision of access through a client-hosted node and expanding the transaction types processed by the platform.

“Client participation and feedback at every iterative step of this journey will be pivotal to the continued success of the platform,” says Michele Hillery, general manager of equity clearing and DTC Settlement Service at DTCC. “Project Ion holds the promise of new settlement functionality supported by robust technical capabilities and is a key part of our on-going efforts to further accelerate settlement and build upon current same-day settlement capabilities. We look forward to our continued work with the industry, while providing a DLT-based alternative to existing services.”

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