Today the Depository Trust & Clearing Corporation (DTCC), the world’s largest post-trade infrastructure, announced that the DLT-based Project Ion platform for stock settlement is now in production. As previously planned, the distributed ledger solution runs in parallel with the DTC’s classic settlement system, which remains the definitive record. R3’s Corda enterprise blockchain was confirmed as the technology selected for the solution.
At this stage, Project Ion is designed to only deal with bilateral equity transactions but is already processing an average of 100,000 transactions per day, peaking at 160,000. This project has massive potential, given that the DTCC processed almost $2.4 quadrillion in transactions last year, and its DTC subsidiary is responsible for the custody of $87 trillion in assets.
To develop the system, the DTCC collaborated with numerous institutions listed later on. Two were fintechs: Robinhood Securities and Fnality, the institutional-backed digital currency platform that plans to enable interbank transaction settlement in central bank money, including USD, GBP, Euro.
Today the DTCC portrayed the project as giving those who want to leverage DLT optionality. Many are interested in DLT-based systems because of the faster settlement times enabled. Currently, T+2 or two-day settlement is the standard, although faster settlement is possible. The SEC has plans to require one-day settlement. And DLT can enable delivery versus payment. The DTCC says that Project Ion can support a variety of settlement times, including netted T-0.
“Digitized assets and emerging technology like DLT are shaping and evolving the financial services landscape, and we remain committed to advancing innovative solutions that capitalize on opportunities, deliver new value and drive the industry forward,” said Murray Pozmanter, Managing Director, President of DTCC Clearing Agency Services and Head of Global Business Operations.
“Project Ion will transform the financial services industry globally for years to come, providing a framework for how this cutting-edge technology can be applied to strengthen and modernize a market to the benefit of all participants,” said R3’s CEO David E. Rutter.
In terms of roadmap, the most specific one mentioned today was potentially expanding Project Ion beyond bilateral transactions to the National Securities Clearing Corporate (NSCC), the central counterparty for all cleared transactions. That would be a big step. It may help in exploiting the reconciliation efficiencies of blockchain.
The other organizations involved in developing the solution included Apex Clearing, Barclays, BNY Mellon, Charles Schwab, Citadel Securities, Citi, Credit Suisse Securities USA, Fidelity Investments, Goldman Sachs, J.P. Morgan, Morgan Stanley, Raymond James Financial, State Street, and Virtu Financial.
Meanwhile, R3 has a track record in the stock exchange space. The SIX Digital Exchange (SDX) uses R3’s Corda, as does the technology arm of Nasdaq, which uses the tech for its digital asset exchange offering. Startup Archax, which plans to launch a digital asset exchange for security token, has also adopted Corda. Large UK asset manager abrdn recently invested in Archax.