New York's Depository Trust & Clearing Corporation (DTCC) has selected IBM, in partnership with Axoni and blockchain consortium R3, to overhaul its Trade Information Warehouse to handle post-trade processing of derivatives contracts over a distributed ledger framework.
The TIW service currently automates the record keeping, lifecycle events, and payment management for more than $11 trillion of cleared and bilateral credit derivatives.
The DTCC says the initiative will reduce the cost of derivatives processing across the industry by eliminating the need for "disjointed, redundant processing capabilities and the associated reconciliation costs".
The planned revamp has been developed with input from key market participants including Barclays, Citi, Credit Suisse, Deutsche Bank, JPMorgan, UBS and Wells Fargo, as well as market infrastructure providers, IHS Markit and Intercontinental Exchange.
Development is expected to start this month, with IBM acting as programme manager for a hosted service which will place peer nodes at participating firms. Axoni will provide distributed ledger infrastructure and smart contract applications, while R3 will provide advisory support.
The project will build on Axoni’s AxCore distributed ledger protocol which will be submitted to Hyperledger when the system goes live, anticipated in early 2018.
The move follows the successful completion of a proof-of-concept (POC) for North American single name Credit Default Swaps (CDS) last year with DTCC, Axoni, IHS Markit and several market participants.
Bridget Van Kralingen, SVP, IBM Industry Platforms, bills the programme as one of the most groundbreaking distributed ledger projects to date in the financial services industry.
"DTCC together with its member banks are reimagining the credit derivatives process," she says. "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."