Market infrastructure group CLS and tech giant IBM are collaborating on a distributed ledger technology (DLT) platform for the financial services industry. LedgerConnect is designed to enable banks, buy and sell side firms, fintechs and software vendors to deploy, share and consume services hosted on a shared distributed ledger network.
The platform will enable financial institutions to access services in areas including sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.
Nine financial institutions, including Barclays and Citi, are participating in the project – which is at proof of concept (PoC) stage – and have selected services from a number of vendors including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems to participate.
As financial institutions increasingly work to implement DLT into their operations, capital markets remain saturated with multiple systems performing the same business functions and with siloed pockets of data that require expensive reconciliation processes.
Sharing the burden
DLT can help reduce these inefficiencies and improve the speed of doing business by providing a single, shared version of events and one implementation of common business functions. However, it can be cost-prohibitive and time-consuming for each vendor, bank, or consortium to create and operate its own unique DLT infrastructure for multiple services when proven technology already exists.
LedgerConnect aims to solve this problem by providing a single shared and highly secured network on which multiple services can be deployed and consumed. This allows financial institutions to focus on transforming business processes rather than creating multiple new blockchain applications, networks and services in silos that could lead to increased interoperability costs and complexity.
Operating on a private permissioned network based on the IBM Blockchain Platform and Hyperledger Fabric technology, LedgerConnect will be designed for regulated and security-conscious enterprises and available across asset classes. Support for additional ledger technologies may be provided in the future, based on market demand and developments.
Alan Marquard, chief strategy and development officer at CLS, said, “We expect LedgerConnect to deliver enhanced efficiencies and economies of scale over single-purpose distributed ledger networks.”
According to Marie Wieck, general manager, IBM Blockchain. “LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value added services for blockchain networks.”
On completion of a successful PoC, generation of market demand and receipt of all necessary regulatory approvals, CLS and IBM plan to make the platform widely available to the industry.