Today OCC, the world’s largest equity derivatives clearing firm, announced a deal with New York enterprise blockchain startup Axoni. Together the aim is to replace the OCC security lending infrastructure with distributed ledger technology (DLT). OCC serves Nasdaq, the NYSE and CBOE.
The organization acts as a central counterparty (CCP) and guarantor between security lenders and borrowers, and as of the end of April, its equity security lending balance was $72 billion. According to industry body ISLA, the global securities lending balance at the end of 2018 was $2.4 trillion.
Work on the project is slated to start this quarter and will be rolled out in phases. The solution is permissioned, and because OCC is a central counterparty, it will operate the nodes that write transactions. This is similar to the Australian Securities Exchange (ASX) CHESS solution, which is also centralized. Clearing member firms can have peer nodes, but they are essentially read only.
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