It’s been just over a year since the DTCC completed the acquisition of tokenization startup Securrency. Now it is launching ComposerX, a combination of Securrency tools and additional functionality, especially around data.
For those not familiar with the DTCC, it is the primary securities post trade firm in the United States, responsible for processing the transfer and settlement of $3 quadrillion in transactions in 2023. It is the world’s largest central securities depository (CSD) and central counterparty (CCP).
When it acquired Securrency, the solution was already in use, including by WisdomTree for its tokenized funds. The asset manager is still a client.
ComposerX aims to support tokenized real world assets (RWA) across a variety of blockchains as well as integrate with legacy systems. However, it primarily works with Ethereum (or EVM) compatible chains. Additionally, it uses Ethereum-based token standards such as ERC-20 and ERC-3643, which is known as the RWA token standard.
ComposerX digital asset components
The ComposerX solution has three facets. The Capital Markets Platform (CMP) is responsible for the end-to-end lifecycle of a tokenized asset, including investor onboarding, transactions and settlement, dividends and other corporate actions, and transfer agent functionality.
ComposerX Factory manages data, but a core function is the management of roles and permissions. That’s not only allow lists for investors, but also the permissions for the issuer and their staff in order to manage token activities. On the data side, it allows users to associate a data schema. What does that mean? Different types of assets need different kinds of data. For example, green bonds are not the same as vanilla bonds and require additional ESG data. Each kind of derivative has a different taxonomy – the data for an interest rate derivative is different to an FX derivative.
The third aspect is ComposerX LedgerScan which is the accounting, reporting and integration aspect. Once upon a time a security might have been issued on a single blockchain. That’s becoming less common, and for the near term future is likely to be rare. If a token is issued on multiple blockchains, then the issuer needs a single view across all blockchains, which LedgerScan provides. It also supports integration with legacy accounting and custody solutions.
It appears that the CMP module may not yet be available.
“We look forward to continuing our work with the industry to build an open, secure and scalable financial markets infrastructure for the digital economy,” said the DTCC’s Nadine Chakar.
Last year the company launched the DTCC Digital Launchpad, a sandbox for industry experiments. Previously, activity in the United States was suppressed because banks could not provide custody owing to the SEC’s SAB 121 staff accounting rule. Given that was rescinded earlier this month, activity should accelerate.