The US depository institution is an active proponent of DLT, working with Digital Asset Holdings on a new model for the repo industry, and with IBM, Axoni and R3 in applying the technology to overhaul its Trade Information Warehouse for handling post-trade processing of derivatives contracts.

In a keynote speech at a conference in Frankfurt, Thompson emphasised the importance of collaboration and standardisation to the ultimate outcome of these projects, outlining the company's participation in the Linux Foundation Hyperledger Project and the Ethereum Enterprise Alliance to this end.

"While collaboration has been considerable to date, we are still in a period where technology firms and vendors are jockeying to position themselves as 'the' technology provider that will serve as the ledger and platform for any number of new smart contract or other applications," he says. "Perhaps understandably, their focus is more on becoming the technology partner of first resort, rather than on establishing and agreeing to common principles that lay the foundation for maximum interoperability of networks, and broadest use of software applications."

The DTCC has set up an 'Office of Fintech Strategy' to assess the opportunities and risks emerging from new technologies, spearheading hundreds of meetings with startups, vendors and market participants on the use of DLT alone.

During his address, Thompson urged policymakers and regulators to become more vocal and engaged in driving the standardisation effort.

"To put it more bluntly, without coordination, the industry’s embrace of an assortment of blockchains and software solutions, relying on a multitude of standards, would only further complicate existing market structure," he told the audience, which comprised senior representatives from the European Central Bank, the Bank of England and the US Treasury Department’s Office of Financial Research. "Without coordination to settle on a common set of standards applicable to DLT and used globally, we are at risk of repeating the past and creating new siloed systems that cannot interact with each other. We need to increase awareness of the need for harmonised technology standards and best practices for the purposes of integration and interoperability. The official sector can help."

Thompson believes that every user of a blockchain must agree to standardised protocols, programming language, data fields and dictionaries for it to be implemented successfully.

He mused that agreements on a common global ledger for reporting derivatives transactions could help regulatory bodies meet G20 goals for lessening risks and improving transparency.

"Agreeing to one common ledger could end the discussion," says Thompson. "All that would be needed to facilitate this is a network node established for the supervisor."

The industry may yet be a long way from realising this vision, but it can be realised, he adds. "It would take disciplined coordination and a disciplined insistence on common standards to achieve.Understanding how the technology fits into existing regulatory frameworks will be critical. We do not expect that the regulatory framework, which has been created over the past 70 years, will change significantly or need to be replaced to make way for an embrace of DLT.

"Rather, the framework will likely evolve as innovation has the potential to provide supervisors with enhanced oversight of the markets and a deeper understanding of risk."