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Industry collaboration on DLT for post-trade scenarios

Leading players in the securities and payments industry have announced they will work together to solve some of the problems of securities processing, which is often a manual, high-cost process. The work will investigate how new distributed ledger technology (DLT) can be developed to facilitate processes that require multi-party participation.

Tackling 'cumbersome manual processes'

The announcement came from a group of central securities depositories (CSDs) and SWIFT, the global payments organisation. Together they hope to tackle post-trade scenarios such as corporate actions processing, including voting and proxy-voting. The work will focus on developing new DLT-based products and investigating how existing standards such as ISO 20022 can be used to support these products. In a statement SWIFT said: “Today, securities processing, particularly in areas requiring multi-party contact, involve extremely cumbersome manual processes that can carry significant inherent cost and risk.”

The memorandum of understanding was signed by the following seven CSDs: Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd. SWIFT said that additional CSDs are expected to join in the coming weeks.

Bringing standards to DLT product development

SWIFT's Stephen Lindsay commented: “To ensure interoperability and smooth migration, it is crucial that new technologies support existing common standards such as ISO 20022. The promise of the technology on paper is great, but it is currently missing a key component around standardisation. There is clear value in re-using established business definitions and facilitating interoperability amongst DLT implementations, which this project will demonstrate.”

The industry group has already defined the product requirements for an e-voting solution based on DLT that includes common standards (ISO 20022) and principles.

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