DTCC moves ahead with project to use distributed ledger tech for repo market

DTCC moves ahead with project to use distributed ledger tech for repo market

Following a successful proof-of-concept, the Depository Trust & Clearing Corporation (DTCC) is pushing ahead with plans for a distributed ledger-based system for the clearing and settlement of US repurchase agreements (repos).

Over the last year, the industry-owned DTCC has been working with Digital Asset - the blockchain startup helmed by former JP Morgan luminary Blythe Masters and in which it invested last year - on the trial.

The two companies now say that they have demonstrated for the first time the successful netting of 'start' leg repo transactions with prior end-of-day net securities obligations in the DTCC environment.

Now they are moving on to 'phase two' of the project, setting up a stakeholder working group to collect feedback from market participants active in the $3 trillion per day US repo and related transaction market. Phase two will also determine whether the technology meets the performance and integration needs of DTCC’s technology environment while allowing for integration with member firms.

Once this has been completed, probably in June, the DTCC will decide whether to move ahead with the development phase of the effort.

Michael Bodson, president and CEO, DTCC, says: "DLT was chosen because of its real-time information-sharing capabilities, enabling all parties to quickly view repo details after trade execution lowering risks and costs while enabling users to take advantage of the benefits of a central counterparty."

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