Banking Investment News

DTCC finds blockchain scales to US equity market volumes

equity trading NYSE

Depository Trust & Clearing Corporation (DTCC) the major equity clearing and settlement services provider, announced results of a blockchain benchmark study. Accenture found that digital ledger technologies (DLT) are capable of supporting volumes of more than 100 million trades per day. Digital Asset and R3 assisted in the trial.

The research showed peak rate performance of 115 million trades per day. Or 6,300 trades per second sustained for five hours. Each trade involves three digital ledger transactions. By comparison, public blockchain Bitcoin only supports single digit transactions per second (TPS). Ethereum can handle 15-25 TPS. And a recent IBM study demonstrated Hyperledger Fabric throughput of 2,250 TPS.

Last week the Hyperledger consortium published a document as a step towards standardizing TPS measurements.

The DTCC emphasized that they tested only basic functionality. Hence they have yet to determine whether DLT is capable of the resiliency, security, operational needs and regulatory requirements of existing clearance and settlement systems.

“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,” said Murray Pozmanter, Head of Clearing Agency Services at DTCC.

Prototype of US Equity Clearance & Settlement System

Accenture built functional prototypes of the US equities clearing and settlement system using DLT. Hence the consultancy created a cloud-based network with more than 170 nodes. These emulate exchanges, market participants and broker/dealers supported by DTCC.

Matched equity trades were captured from exchange DLT nodes. Trades were then assigned and substituted with the DTCC acting as central counterparty (CCP) thereby maintaining anonymity on the ledger. Obligations were netted, and the trades were settled.

Over 19 weeks Accenture ran DLT performance tests on the Digital Asset platform (DTCC is an investor) as well as the R3 Corda platform.

“This project answered key questions and built serious confidence in blockchain’s ability to drive large-scale transformation,” said David Treat, Managing Director, Global Blockchain Lead, Accenture.

The DTCC has been experimenting with blockchain for three years. At the beginning of 2017, they announced a planned Proof of Concept for settling credit derivatives. This is a DLT upgrade of the existing Trade Information Warehouse. The project uses Axoni technology managed by IBM with R3 as a consultant.