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SWIFT and 7 CSDs collaborate to explore DLT potential in post-trade landscape

SWIFT, the global provider of secure financial messaging services, has signed a Memorandum of Understanding (MoU) with seven central securities depositories (CSDs) to explore the potential of distributed ledger technology (DLT) in post-trade processes, IBTimes UK reported.

The CSDs participating in the initiative include Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd. Additional CSDs are also expected to collaborate in the forthcoming weeks.

The group will look into the possibility of DLT implementation in areas such as corporate actions processing, featuring voting and proxy-voting. It will also explore various solutions that can be developed by using the technology and their compliance with existing standards such as ISO 20022.

The MoU also supports collaboration between the participants on DLT R&D, defining the role of financial market infrastructure providers in DLT-based markets, as well as identifying, defining and developing DLT use cases in a CSD environment and the post-trade scenario.

Furthermore, the group will also focus on developing common standards and principles for DLT use amongst CSDs and the financial industry. It will also work towards widespread adoption of such standards and principles by other parties, including regulators.

"To ensure interoperability and smooth migration, it is crucial that new technologies support existing common standards such as ISO 20022," says Stephen Lindsay, Head of Standards at SWIFT. "The promise of the technology on paper is great, but it is currently missing a key component around standardisation. There is clear value in re-using established business definitions and facilitating interoperability amongst DLT implementations, which this project will demonstrate."

The International Securities Services Association (ISSA) has already endorsed the initiative and included the group as part of a new work stream within its existing DLT Working Group. As a part of ISSA, the CSD Working Group on DLT will initially focus on establishing a business framework on how digital assets could be used in post-trade operations.

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THGDP Growth YY

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