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DTCC plans 2022 go live for blockchain stock settlement Project Ion

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Today the DTCC, the world’s largest securities settlement organization, announced the successful completion of a proof of concept (PoC) of its Project Ion blockchain solution to shorten stock settlement times. Subject to regulatory approval, it plans to go live in the first quarter of 2022.

“Cryptocurrency, digitized assets, DLT and other innovations increasingly are integral parts of the evolving financial services industry, and we are excited about the future opportunity in each of these areas,” stated Murray Pozmanter, Head of Clearing Agency Services and Global Business Operations at DTCC. 

“Project Ion has demonstrated that settlement in a T+1 or T+0 environment are effective use cases for DLT, and we look forward to working with our clients and the industry to launch the new platform.”

Earlier this year, the DTCC said it was working on shortening securities settlement times. And in June, the SEC added plans to require one-day settlement to its work agenda.

Currently, stocks are settled in two days (T+2). This creates counterparty, credit and default risks if a company suffers financial difficulties within that two-day window. Hence there’s a move to change the default settlement period to T+1 and eventually shorter than that. Project Ion was designed for a netted T+0 settlement but also supports T+1 and T+2.

The DTCC will enable T+1 settlement on its classic systems but is offering the DLT based solution Project Ion for those that want to “ready their firms for the future operating model.” Project Ion won’t initially be available for all transactions. It will only support limited bilateral transactions and will run in parallel to existing systems. In fact, trades will be passed from the DLT platform to the existing DTC system.

But that’s just the first phase. In the future, the aim is to exploit the reconciliation efficiencies offered by blockchain, allow clients to host nodes on the DLT network, and expand transaction types.

The Project Ion PoC was first unveiled in May of last year and used Digital Asset’s DAML smart contract language, but the blockchain platform was not mentioned.

This isn’t the DTCC’s only blockchain project. It’s also working on upgrading its derivatives settlement platform, the Trade Information Warehouse.