Distributed Ledger Technology: Time to Shine

5 Markets and Securities Services | Distributed Ledger Technology: Time to Shine Markets and Securities Services | Distributed Ledger Technology: Time to Shine 4 . What Does The Future Ecosystem Look Like? In the current ecosystem, each party in the value chain records a transaction on its own ledger. These transactions are processed and duplicated by each party who reconcile with each other. In the future ecosystem, the ledger is shared by all parties as a single source of truth. Each party enhances the data real-time as the transaction passes through the value chain. This removes the need for any reconciliation, bilateral messaging or segregated data sources. In fact, the entire trading and settlement can become a single process. CURRENT ECOSYSTEM VALUE CHAIN FUTURE ECOSYSTEM VALUE CHAIN Investor Broker CSD OPS AND DATA OPS AND DATA OPS AND DATA OPS AND DATA OPS AND DATA I n v e s t o r B r o k e r C S D Global Custodian Sub Custodian “In markets with immediate trading and settlement, the role of clearing could disappear meaning there may no longer be a need for a central counter-party clearing house (CCP). As DLT provides a single source of truth, all market participants will be working from the same data sets thereby reducing the number of messages exchanged between counterparties and diminishing the need for reconciliations,” said Nadine Teychenne, director of custody product development, distributed ledger technology and digital assets at Citi. By having a single source of irrevocable truth between all parties to a trade, the likelihood of mistakes or errors being made during the transactional lifecycle will recede, and with it, so will risk. The availability of a single source of truth will also have a significant impact on other post-trade asset servicing activities such as corporate action processing, which have historically been higher risk and involve manual intervention, creating added costs and inefficiencies in the transactional lifecycle. While COVID-19 has led to some progress around digitalisation (e.g. removal of wet signatures, renewed uptick in e-voting, virtual AGMs) in various markets, many experts believe the adoption of DLT will help eliminate a number of the pain- points and risks synonymous with post-trade processing. S u b C u s t o d i a n G l o b a l C u s t o d i a n