Process Equity Trades in Parallel on DLT
Sector: Tertiary sector · Industry: Banking and financial services · Organisation: Depository Trust & Clearing Corporation, R3 · Maturity level: Production
The Depository Trust & Clearing Corporation launched a parallel settlement environment based on distributed ledger technology through its Project Ion initiative. The platform processed an average of more than 100,000 bilateral equity transactions per day, reaching peaks of nearly 160,000 transactions. The classic settlement system of the organization continues to serve as the definitive legal book of record.
Documentation status
- Project status: Production (as of 22 August 2022) — Project Ion went live in August 2022 as a parallel production environment for US stock trades.
- Evidence: Evidence medium
- Editorial review: pending
Description
The Depository Trust & Clearing Corporation, together with R3, has provided a DLT platform for parallel settlement of stock trades. The infrastructure targets institutional market participants seeking to accelerate and more efficiently reconcile their bilateral securities transactions. The traditional clearing system continues to act as the leading authority, while the DLT environment demonstrates practical viability under high market load.
With Project Ion, the central US financial market infrastructure DTCC responded to the growing demand for faster settlement cycles and modern technology. The platform uses R3 Corda to reconcile and settle bilateral stock transactions in parallel to the existing system. In production, the environment processed on average more than 100,000 transactions per trading day, proving scalability for peak loads. Participating financial institutions mirrored their business data into the DLT, testing consistency and resilience without legal risks. This approach establishes a proven path for gradual modernisation of central market infrastructures without a hard system break.
Perspectives
B2B — organisations perspective
For banks and broker-dealers, the platform offers a standardised interface for bilateral transaction reconciliation in real time. This minimises counterparty risks and allows operational preparations for shorter statutory settlement cycles.
Employees perspective
Employees in settlement departments benefit from automated reconciliation processes and fewer erroneous data records. Operational effort increasingly focuses on exception handling of complex cases rather than repetitive data entry.
Benefits
General
- High operational resilience through modern redundancy architecture
- Real-world testing under extremely high daily transaction volumes
- Minimising operational system risks through parallel operation alongside the legacy system
B2B — organisations
- Preparing institutional trading partners for accelerated settlement cycles
- Reducing bilateral reconciliation efforts between financial institutions
Employees
- Relieving repetitive checks through automated transaction matching
- Increased process transparency in resolving discrepant booking entries
Challenges
General
- Synchronization of states between existing legacy systems and the DLT network
- Ensuring regulatory recognition during a complete system transition
B2B — organisations
- Integration effort for connecting internal banking systems to the DLT interfaces
Employees
- Need to acquire expertise in handling DLT-based clearing software
Technology foundation
The solution is based on the private enterprise DLT platform R3 Corda, specifically designed for regulated financial markets. Corda enables bilateral transaction reconciliation and strict confidentiality between participating market actors without global data dissemination.
Implementation examples
Project Ion Parallel Production
The goal was to provide a highly scalable alternative settlement infrastructure to prepare for shortened settlement cycles and reduce counterparty risks in bilateral equity trading.
DTCC introduced a parallel DLT settlement platform based on R3 Corda for US equity trades with Project Ion. Six-figure daily volumes were successfully processed in live operation alongside the existing DTC system.
Project Ion went live in August 2022 in a parallel production environment to validate the performance of DLT in the high-volume US equity market. Leading financial institutions participated in the system, while the classic DTC system remained unchanged as the official ledger. The DLT processed an average of over 100,000 bilateral equity transactions daily and handled nearly 160,000 transactions on peak days.
Processing an average of more than 100,000 transactions per day with peak values of nearly 160,000 transactions according to the official DTCC announcement.
Handling extreme transaction loads without risk of failure for the overall market as well as harmonised data management between novel DLT and existing market infrastructure.
Tags
Securities settlement, Post-trade, Equity trading, Financial market infrastructure, Enterprise DLT