DTCC Enters Test Phase on DLT Project for Credit Derivatives

The initiative to re-platform DTCC’s Trade Information Warehouse will “revolutionise the derivative industry’s credit market infrastructure”, says DTCC’s Chris Childs.

DTCC (the Depository Trust & Clearing Corporation) has announced that it has advanced to the testing phase of a “ground-breaking” project to re-platform its credit derivatives Trade Information Warehouse (TIW) using distributed ledger (DLT) and cloud technology.

The TIW serves as the golden record for bilateral credit derivatives, performing lifecycle events, payment calculations and settlement. It includes cleared derivative positions from ICE, the JSCC (Japan Securities Clearing Corporation) and LCH SA’s CDSClear, providing market transparency through public reporting of cleared and uncleared transactions.

The standardised nature of the process flows and data models make credit derivatives an ideal test case for DLT, said a DTCC press statement. Bolstered by common data standards and governance, a DLT-based TIW service will enable the industry to process and report to regulators from the same data record.

The TIW re-platforming has been achieved with a consortium that includes IBM, Axoni and R3. IBM provides programme management, DLT expertise, and integration services; Axoni provides the distributed ledger infrastructure and smart contract applications; and R3 acts as a solution advisor.

Fifteen of the world’s largest global banks – including Barclays – are participating in the testing phase, which entails end-to-end, structured user acceptance tests that leverage use cases and test data and validate the interaction between systems, firms and market infrastructure providers, including MarkitSERV and its new platform for credit, TradeServ.

“The transformation of DTCC’s Trade Information Warehouse using distributed ledger and cloud technology, along with the modernisation of MarkitSERV’s confirmation system, is truly a ground-breaking effort pushing the boundaries of technology use in the industry,” said DTCC DerivSERV CEO Chris Childs, adding that the initiative will “revolutionise the derivative industry’s credit market infrastructure”.

The project will additionally “enhance efficiencies and lower costs and risks for the industry,” according to Lee Braine at the Investment Bank CTO Office at Barclays.

DTCC expects to move to an “open” testing phase by the end of the year, where other market participants and service providers will also be able to participate in testing.

Testing is expected to be complete by Q1 2019, with the re-platformed TIW scheduled to go live thereafter.

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