the Zahlungsverkehrsdienstleister Swift and seven central securities depositories are together distributed ledger technologies (DLT) for Advance applications in securities markets. The connection with existing standards and the acceptance of market participants and regulators are central to this project.
A recently signed memorandum of understanding says, the central securities depository and swift want to demonstrate how DLT can be used in the post-trade sector, such as the processing of corporate actions, electronic voting, and Depot voting. Currently, securities settlement – especially in areas that require contact with many stakeholders – is connected with extremely cumbersome manual processes, which could bring significant costs and risks. The CSDS are involved with the DLT project NASDAQ market technology, Abu Dhabi Securities Exchange, Caja de Valores of Argentina, the Chilean Depósito Central de Valores, national settlement depository from Russia, the Swiss six securities services and strategy from South Africa. The accession of another CSD is expected according to swift in the coming weeks.
together you can support new product types for the post trade area examine and check standards as existing standards such as the ISO 20022. “To ensure interoperability and a smooth migration is crucial that new technologies to support existing standards such as ISO 20022”, said Stephen Lindsay, head of standards at swift, and added:
“the promises of technology are on the paper great, currently a key component in the standardization lacks but. This project will show that a clear value in the re-use established definitions and facilitate interoperability between DLT applications.”
The initiative will establish new standards for the application of DLT between stakeholders and the financial industry and adapt existing standards. Another goal is to promote the adoption of these standards by other market participants and regulators. It should help that the initiative of the International Association of investment service providers (ISSA) was welcomed and included in its working group of the DLT.
Swift hugged the Blockchain
swift has already in January of last year a feasibility study launched, under which the suitability of Blockchain technology for the improvement of the real-time comparison of nostro accounts should be checked. In the current correspondent banking model, banks must monitor the funds in their foreign accounts of day-end closings, this created considerable costs. But possible about banks, which manage liquidity of its nostro accounts in real time, you could determine exactly how much money each individual account is required at any time. “And that ultimately allows them to release significant resources for other investments,” said Damien Vanderveken, of appropriate research and Development Manager at swift.
As reported by BTC-echo, globally active banks of the feasibility study were joined in the summer of last year 22 which had originally been initiated with six founding banks. The field now reads like the who’s who of international finance, ABN AMRO and BNP Paribas of Commerzbank and Deutsche Bank, JPMorgan Chase, Santander, Société Générale, Standard Chartered, Sumitomo Mitsui Banking Corporation up to UniCredit and Wells Fargo. Swift is the proof of concept the Hyperledger * fabric v1. 0-a technology in connection with swift core functions, to ensure that all information related to Nostro/Vostro accounts remain confidential and only by the account holder, as well as his Correspondent bank partner can be found.
An interim report of the feasibility study were submitted in October. Therefore, the DLT application developed by swift can provide the functions and the necessary richness of data in real time to support a reconciliation. However, there are still some challenges, such as coexistence with existing applications. Damien Vanderveken, head of user experience at swift and research and Development Manager at SWIFTLab, said:
“preliminary results of the DLT feasibility study are positive for this application. Significant progress has been made, but the latest generation of Blockchain technology is still in its infancy. It will take time until it is sufficiently mature and scalable for business-critical applications.”