DTCC Preps “The Great Collateral Experiment”

The Depository Trust & Clearing Corporation (DTCC) has announced the first development using its Digital Launchpad, unveiled late last year, a platform for tokenised real-time collateral management.

The platform will be demonstrated at an event DTCC is calling “The Great Collateral Experiment” on 23 April, at which it hopes to prove the value of increased mobility and velocity of collateral, as well as better capital efficiencies and liquidity. DTCC adds the experiment will “facilitate convergence of traditional and digital assets” and enable an open liquidity ecosystem for market participants to use digital applications that enhance collateral operations.

The utility observes that as the markets grow more complex and cost pressures rise, the demand for high quality collateral increases. “Blockchains present a significant opportunity to streamline the flow of collateral across siloed infrastructure, unlocking major capital and operational efficiencies,” it states.

The application on the DTCC AppChain, is built atop LF Decentralised Trust’s Besu blockchain. DTCC says it is giving participants a “robust digital financial infrastructure to help navigate the fragmented data landscape that spans traditional and digital networks”. It adds the platform leverages a scalable, industry-driven framework rooted in open architecture and common standards.

“Our goal is to highlight how we can enable real-world, institutional-grade digital collateral market infrastructure,” says Nadine Chakar, global head of DTCC Digital Assets. “This platform is unique in that we’ve created something that’s more open, flexible, dynamic, and comprehensive than any previous digital collateral initiative.

“Our work does not stop today,” she continues. “We plan to continue building on this collateral model, engaging with the industry and our regulators to develop the standard for tokenised collateral across global jurisdictions, working with the buy-side to give them more direct market access, and laying out the regulatory and legal path to implementation.”

Dan Doney, chief technology officer of DTCC Digital Assets, adds, “Collateral mobility is the ‘killer app’ for institutional use of blockchain – we’ve pulled together a coalition of technologists and market participants to successfully showcase how the speed and openness of this technology can safely and reliably unlock liquidity in traditional markets at scale. By using smart contracts to automate the full range of collateral operations, we enable complex trade execution across markets in real-time at any time, even in volatile conditions.”