US-based financial market infrastructure giant, the Depository Trust & Clearing Corporation (DTCC), is building a new service to standardise trading across a range of private securities including digital assets.
In a release last week, DTCC says its Digital Securities Management (DSM) platform would “streamline the issuance, transfer and servicing of private market securities”.
Expected to go live next year, pending regulatory approval, the DSM would for the first time offer a standardised, industry-wide service for non-listed assets while “relying on the secure and resilient infrastructure that we have long provided for the public markets”, DTCC chief, Michael Bodson, said in the statement.
“DTCC has a long history of innovating to make the global financial services industry more efficient, and we continue to explore new and emerging technologies to support the digitalization and tokenization of assets,” Bodson said.
In an initiative targeting the burgeoning crypto market as well as more traditional private assets, the DSM would offer clients access through both centralised and distributed (blockchain) mechanisms.
Designed as “blockchain agnostic”, the planned DTCC private asset platform would first tap into the public Ethereum network with a view to adding further “public and private blockchain support based on client and market demand”, the release says.
Jennifer Peve, DTCC head of strategy and business development, said the planned DSM release followed extensive feedback from industry participants on how to bring the disparate private assets world into the digital age.
“DSM is capable of transforming the private markets, unifying an increasingly fragmented space under a common infrastructure that can automate manual processes, reduce costs and risks, and open up more opportunities for investors,” Peve said.
As outlined in a just-released paper, the mooted DTCC private markets platform could bring benefits including:
- reduced operational costs through standards and increased automation, including security identifiers;
- electronification of transfer restriction approvals;
- gross settlement as early as T+1; and
- cost mutualisation of non-differentiated services, such as centralised stock record keeping and codification of transfer restrictions.
At launch, the DSM would service pre-listing equities before adding other assets such as “funds, debt, real estate, loans and other private instruments that are underserved today from a market infrastructure perspective”.
Concurrently, DTCC is also engaged in upgrading the current back-end trading system for US equities that could lead to almost real-time settlement.