The Depository Trust & Clearing Corporation (DTCC), which operates the main clearing house for equities in the US, has gone live with its settlement platform that uses distributed ledger technology, in a parallel production environment, processing up to 160,000 transactions per day.
Project Ion, which began life in May 2020, is considered to be one of the largest attempts to use DLT in equity settlement. The aim is to support a netted T+0 settlement cycle, as well as T+2, T+1 and extended cycles.
The project has been developed in collaboration with many of the world’s leading market participant and technology provider firms, including Apex Clearing Corp., Barclays, BNY Mellon, Citadel Securities, Citi, Credit Suiss, Fidelity Investments, Fnality International, Goldman Sachs, J.P. Morgan, Morgan Stanley, State Street Corporation, and Virtu Financial
DTCC also partnered with enterprise technology provider R3 to develop and launch the Project Ion platform leveraging R3’s Corda DLT software.
DTCC said that the goal of Project Ion is to ultimately provide a “resilient, secure and scalable alternative settlement service” to clients, with the option to leverage DLT for those firms who wish to take advantage of the emerging technology.
“This is a milestone achievement for the equity markets and reflects the deep level of collaboration and partnership between DTCC and our clients,” said Murray Pozmanter, managing director, president of DTCC clearing agency services and head of global business operations.
He added, “Project Ion is an important step forward in advancing digitalisation in financial markets and opens the door to exciting, new opportunities to drive greater efficiencies, risk management and cost savings for the industry.”
Michele Hillery, general manager of equity clearing and DTC settlement service at DTCC, said, “Project Ion provides a parallel book and infrastructure for limited bilateral transactions, with DTC’s existing systems remaining the authoritative source of transactions.
With firms across the industry at different levels of maturity around DLT adoption, DTCC is building this platform to provide optionality and flexibility to clients. Those who are ready to leverage the Project Ion platform can begin development efforts today while others can continue to use our classic solutions.”
The firm said, now that the production parallel is live, it is working closely with clients on a phased expansion of the platform.
The Project Ion platform will continue to be enhanced according to client and industry needs.
Future enhancements may include additional DTC activities and capabilities as well as the expansion of Project Ion to DTCC subsidiary National Securities Clearing Corporation (NSCC) to take advantage of NSCC’s central counterparty (CCP) trade guarantee for every cleared transaction.
While the move has been welcomed by industry participants, they would also like to see further progress beyond the equities sphere.
“While this move to T+0 is a significant step forward a section of the cash equity markets, other asset classes are still are still trying to identify changes and enhancements required just to facilitate T+1,” said Rob McGowan, senior sales executive, Gresham Technologies.
He added, “Take FX as a prime case in point. With firms engaging in currency exchange transactions across many different jurisdictions and time zones – one of the biggest concerns is around breaks and basic mistakes in workflows.
Firms need to identify counterparties that currently send delayed, incomplete, or erroneous data that can cause breaks or fails.”
