DTCC to create ‘golden copy’ for CDS with blockchain

The Depository Trust and Clearing Corporation (DTCC) is deploying blockchain technology to create a replica of its “golden copy of record” of Credit Default Swaps (CDS) for customers.

Speaking during a joint workshop between the ECB, US Treasury and Bank of England, DTCC vice chairman Larry Thompson stated the technology would be implemented as part of its Trade Information Warehouse (TIW) initiative.

It is hoped the use of blockchain will grant customers a copy of record of the CDS transfers it processes as well as reduce costs and eliminate discrepancies between counterparties.

Established in 2003, the TIW service aims to reduce the manual component in post-trade processing of over-the-counter (OTC) derivatives transactions.

“Our vendor partners are providing the smart-contract software that would run as an application on a permission-based blockchain,” said Thompson.

“This software should facilitate greater automation of credit-event processing, and the blockchain would provide the shared, standardised ledger that eliminates many of the internal reconciliation costs our customers manage today.

“Through use of DLT, all TIW’s customers could have an exact replica of the golden copy of record kept at TIW.”

Earlier this year SIX Securities Services developed a blockchain powered service covering the full bond trading life cycle from issuance to settlement.

The prototype enables the issuing of bonds as smart contracts that specify at what dates coupon payments are made, for what amounts and when repayments occur.