The results of the study prove that distributed ledger technology’s performance can scale to meet the needs of markets of different sizes and maturity, says DTCC’s Murray Pozmanter.
DTCC (the Depository Trust & Clearing Corporation) has announced the results of a benchmark study demonstrating that distributed ledger technology (DLT) is capable of supporting average daily trading volumes of more than 100 million trades per day.
The study was conducted by Accenture with technology support from Digital Asset and R3, and showed that DLT can perform at levels necessary to process an entire trading day’s volume (US equities market) at peak rates, which equates to 115,000,000 daily trades, or 6,300 trades per second for five continuous hours.
“Currently, public blockchains supporting cryptocurrencies operate at single or double digit per second performance, which until now was the only indication of the potential volume that a private DLT might be able to support,” DTCC said in a statement.
DTCC commissioned the study and provided the expertise and requirements for Accenture to build functional prototypes of the US equities clearing and settlement system using DLT, running a network of over 170 nodes to model the existing financial ecosystem of exchanges, market participants and broker/dealers.
The prototypes were designed to test the capture of matched equities trades from exchange DLT nodes, novation of trades with DTCC as the CCP (central counterparty) to maintain trading anonymity on the ledger, creation of netted obligations, and settlement of the trades.
During the 19-week study, DLT performance tests were ran using commercial platforms from Digital Asset and R3, whose engineers provided support on performance tuning. The main objective was to analyse the technology’s ability to process trading volumes characteristic of the US equities market at peak rates.
“We are excited to lead this important work to advance the performance capabilities of DLT and help create new possibilities for leveraging the technology more broadly across financial markets,” said DTCC Head of Clearing Agency Services Murray Pozmanter. “As an early adopter of DLT, we are encouraged by the results of the study because they prove that the technology’s performance can scale to meet the needs of markets of different sizes and maturity.”
As the study only tested basic functionality, additional work is needed for DTCC to determine if the DLT can meet the resiliency, security, operational needs and regulatory requirements of its existing clearance and settlement system.
“This study is a natural next step in our efforts to advance the use of DLT, and we look forward to continuing to work collaboratively with the industry to identify new opportunities to use the technology to enhance the post-trade process,” said DTCC Managing Director of IT Architecture Rob Palatnick, noting earlier concerns around the scalability the technology.
Accenture Managing Director and Global Blockchain Lead David Treat said the project “answered key questions and built serious confidence in blockchain’s ability to drive large scale transformation.”