DTCC trials distributed ledger tech for repo market

DTCC trials distributed ledger tech for repo market

The Depository Trust and Clearing Corporation (DTCC) is working with Digital Asset Holdings on a distributed ledger-based system for the clearing and settlement of US repurchase agreements (repos).

Earlier this year, the industry-owned DTCC pitched itself as the coordinator of an industry-wide investigation into whether distributed ledger technology is the answer to "certain limitations" in the post-trade process.

Now it is working with Digital Asset Holdings - the blockchain startup helmed by former JP Morgan luminary Blythe Masters and in which it invested in January - on its first trial, building a proof-of-concept to improve the repo clearing process.

The partners hope that distributed ledger tech, and its real-time information sharing capabilities, will help parties in a repo trade view details almost immediately after it is executed. "This will enable buy- and sell-side firms to agree to repo trade details much more quickly, lowering risks and costs," says a statement.

Under this agreement, the DTCC and Digital Asset will build and incorporate structured, cryptographic ledger entries into existing securities trade and settlement flows, showing how market participants will be able to create and interact with a ledger of obligations and positions which evidence matched securities transactions.

Once a proof-of-concept has been developed and integrated into the DTCC environment, the partners plan to bring in market participants for collaboration and testing.

Mike Bodson, president and CEO, DTCC, says: "Distributed ledger technology has the potential to revolutionize certain post-trade processes that are inefficient and complex, and repos are a great place to start. There are absolute opportunities to make clearing in this area much more efficient, and we look forward to working with Digital Asset on this exciting project."

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