DTCC study shows DLT can support US equity market volumes

A study from the Depository Trust and Clearing Corporation (DTCC) said that distributed ledger technology (DLT) is capable of supporting average daily trading volumes in the US equity market of more than 100 million trades per day, or 6,300 trades per second for five continuous hours.

The study, which is not being released, was conducted by Accenture with additional support provided by technology service providers Digital Asset (DA) and R3, and proved that DLT can perform at levels necessary to process an entire trading day’s volume at peak rates, which equates to 115,000,000 daily trades. Currently, public blockchains supporting crypto-currencies operate at single or double digit per second performance, which until now was the only indication of the potential volume that a private DLT might be able to support.

However, additional work will be necessary for DTCC to determine if DLT can meet the resiliency, security, operational needs and regulatory requirements of its existing clearance and settlement system. Murray Pozmanter, head of Clearing Agency Services at DTCC, said, “As an early adopter of DLT, we are encouraged by the results of the study because they prove that the technology’s performance can scale to meet the needs of markets of different sizes and maturity.”

Testing

DTCC commissioned the benchmark study and provided expertise and requirements for Accenture to build functional prototypes of the US equities clearing and settlement system using DLT. During the 19-week study, DTCC and Accenture ran DLT performance tests using commercial DLT platforms offered by Digital Asset (DA platform) and R3 (Corda platform), whose engineers provided support on performance tuning. DTCC’s main objective was to analyze DLT’s ability to process the massive trading volumes of the US equities market, not the capabilities of individual commercial platforms.

Accenture built a network of more than 170 nodes to model the financial ecosystem of exchanges, market participants and broker/dealers supported by DTCC. The prototypes were designed to test the capture of matched equities trades from exchange DLT nodes, novation of those trades with DTCC acting as the central counterparty (CCP) to maintain trading anonymity on the ledger, creation of netted obligations and settlement of the trades. The test environment for this study was set up in the cloud.

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