How DTCC Is Leveraging Blockchain for Capital Market Efficiency | The Future Is On Spotlight Series
Summary
TLDRNadine Shakar and Dan Dony from DTCC Digital Assets discuss the transformative potential of blockchain in unifying global financial markets. They emphasize the importance of compliance, safety, and soundness in digital infrastructure. The script highlights three key impacts: enhancing private markets, enabling product structuring through tokenization, and automating collateral management. The vision is a future where digital rails create accessible, efficient, and democratized financial markets.
Takeaways
- 🌐 Blockchain technology has the potential to unify various financial markets, making them more accessible and efficient.
- 🚀 The DTCC (Depository Trust & Clearing Corporation) is playing a significant role in the digital transformation of financial markets, aiming to create a unified market infrastructure for digital assets.
- 🛠️ A multifaceted approach is being taken to tokenize the entire life cycle of assets, prioritize compliance, and ensure the safety and soundness of markets.
- 🏦 The impact of blockchain is broad, with private markets, product structuring, and collateral management being key areas where significant changes are anticipated.
- 📈 Private markets can become more efficient and liquid through blockchain, allowing better management of asset life cycles and blending with public markets.
- 💼 Product structuring with blockchain enables the creation of new financial instruments and strategies, such as direct indexing and asset-backed tokens.
- 💎 Automation of collateral management can lead to instant settlement of transactions, releasing value locked in balance sheets and improving bank efficiency.
- 📊 The growth of digital financial markets is expected to be substantial, with estimates of $15 trillion in assets on blockchain rails by 2030.
- 🔐 Interoperability between legacy systems and new blockchain rails is critical for the adoption of digital assets and the continuation of innovation in ledger technologies.
- 🌟 The future vision includes a democratized, efficient, and accessible financial market, with blockchain technology acting as a trusted party and benefiting all ecosystem participants.
Q & A
What are 'rails' in the context of the financial markets as discussed in the transcript?
-'Rails' refer to the systems and infrastructures used for conducting transactions in different markets, such as cash, commodities, and securities. These rails are currently separated by jurisdictions globally, but blockchain offers the potential to unify them.
How does blockchain help in unifying financial markets?
-Blockchain enables different transaction rails, such as cash, commodities, and securities, to come together on a unified platform. This makes the markets more accessible and efficient, removing traditional barriers imposed by jurisdictional separations.
Who are the key speakers in the video, and what roles do they play?
-The key speakers are Nadine Shakar, the Global Head of DTCC Digital Assets, and Dan Doney, the Managing Director of DTCC Digital Assets and former founder of Securency. They both discuss DTCC's role in digital assets and blockchain technology in financial markets.
What is DTCC’s approach to integrating blockchain in the financial system?
-DTCC is taking a multifaceted approach by developing digital products that handle the entire life cycle of tokenization, moving from proof of concepts to production, and working with fintech providers to build a resilient and interoperable infrastructure for digital assets, similar to how traditional assets are handled.
What challenges are currently faced by private markets, according to Dan Doney?
-Private markets are disjointed, with many transactions managed by spreadsheets or disconnected systems, making liquidity difficult. Blockchain could streamline the full life cycle of private market assets, opening opportunities for blending private and public markets.
What is the significance of 'product structuring' in blockchain, as explained by Dan Doney?
-'Product structuring' refers to the ability to create financial instruments quickly using blockchain. This can be done by embedding a wallet into a token, allowing the token to own other assets or positions, which streamlines the creation of new financial products.
How can blockchain improve collateral management in financial markets?
-Blockchain can automate collateral management processes, including repo, securities lending, and margin transactions. This automation can lead to instant settlement, freeing up value and improving efficiency for financial institutions.
What role does tokenization play in the future of financial markets?
-Tokenization, supported by blockchain technology, allows the conversion of assets into digital tokens. This can enhance efficiency, accessibility, and liquidity in markets, and is projected to lead to $15 trillion worth of assets being on blockchain rails by 2030.
What barriers are currently preventing financial institutions from adopting blockchain technology?
-Many financial institutions are hesitant to adopt blockchain because they have heavily invested in their legacy technology systems. There is also a lack of standardized data, and many institutions feel intimidated by the complexity of blockchain technology.
What is the importance of data standardization in blockchain markets?
-Data standardization is crucial for blockchain-based assets to be meaningfully managed and analyzed. Currently, different tokens and assets lack uniformity in their data, making it difficult for institutions to manage portfolios and assess risk efficiently. DTCC is working to introduce mechanisms that standardize this data across markets.
Outlines
🌐 Unifying Global Financial Markets with Blockchain
Nadine Shakar, the global head of DTCC Digital Assets, and Dan Dony, the managing director of DTCC Digital Assets, discuss the transformative potential of blockchain technology in unifying cash, commodities, and securities transaction rails across global jurisdictions. They highlight the importance of DTCC's role in creating a unified market and the multifaceted approach to bring the industry together. This includes product development with a focus on tokenization, moving from proof-of-concept to production, and collaborating with fintech providers to build a resilient, scalable, and interoperable digital asset environment. They emphasize the need for compliance and safety in digital infrastructure, aiming to become the digital financial markets of the future.
📈 Impact of Blockchain on Financial Markets
The speakers highlight three significant impacts of blockchain on financial markets. First, private markets, which are often disjointed and managed inefficiently, can become more liquid and integrated with public markets through blockchain rails. Second, product structuring is revolutionized by the ability to embed wallets into tokens, allowing for the creation of new financial instruments and direct indexing strategies. Third, the automation of collateral management processes can lead to instant settlement of transactions, significantly improving the efficiency and performance of financial institutions. They also discuss the importance of regulatory certainty and the role of retail and institutional adoption in driving the blockchain movement forward.
🔄 Interoperability and the Future of Financial Markets
The conversation focuses on the importance of interoperability between legacy systems and new blockchain rails. The goal is to create an accessible and interoperable financial ecosystem that meets institutional requirements for accounting, risk management, and ease of use. The speakers discuss the challenges of scaling blockchain to handle global market demands, the threat of quantum computing, and the need for data standardization. They also emphasize the importance of education and providing safe environments for institutions to experiment with digital rails. The future vision includes a world with unified markets that are open, efficient, accessible, and democratized, where technology serves as a trusted party, and the end consumer benefits from reduced inefficiencies and increased access to high-value investments.
Mindmap
Keywords
💡Blockchain
💡Tokenization
💡Interoperability
💡Private Markets
💡Collateral Management
💡Regulatory Standards
💡Quantum Computing
💡Data Standardization
💡Resilience
💡Democratization
💡Compliance
Highlights
Blockchain enables the unification of cash, commodities, and securities markets, making them more accessible.
Nadine Shakar is the global head of DTCC Digital Assets, discussing the potential of blockchain in financial markets.
Dan Dony, Managing Director at DTCC Digital Assets, emphasizes the importance of compliance and safety in digital markets.
DTCC aims to create a unified digital infrastructure for the financial industry.
Tokenization is a key focus, with an emphasis on compliance and safety.
The goal is to move from individual proof-of-concepts to production-ready solutions.
Collaboration with fintech providers is crucial for building resilient digital asset infrastructure.
Private markets are expected to benefit significantly from blockchain technology.
Blockchain can streamline product structuring and create new financial instruments.
Automation of collateral management processes can lead to instant settlements and释放巨额价值.
Regulatory certainty is aiding institutional adoption of digital assets.
Retail investors are leading the way, with institutions following.
Blockchain use cases aim to increase efficiency in financial processes.
Interoperability between legacy systems and blockchain is a critical enabler for digital transformation.
The market anticipates $15 trillion worth of assets on blockchain by 2030.
Quantum computing is a potential threat to blockchain, necessitating post-quantum technologies.
Standardization of data on blockchain is essential for risk management and portfolio management.
Education is needed to overcome fear and intimidation of blockchain technology.
Interoperability is crucial for bridging legacy systems with new blockchain technologies.
Unified markets will lead to fairer and more open financial systems.
The technology aims to democratize access to high-value investments.
Blockchain technology can act as a trusted party without replacing existing market participants.
The end consumer is expected to be the winner as digital rails become more accessible and efficient.
Transcripts
we have separated cash rails and
commodities rails and securities
transaction rails we have markets that
are separated by jurisdictions globally
blockchain makes it possible for all of
these rails to come together and for us
to have unified markets which makes them
much more
[Music]
accessible my name is Nadine shakar I'm
the global head of dtcc digital assets
I'm Dan dony and I am the managing
director C
of dtcc digital assets and formerly the
founder of securency
[Music]
we think the potential is huge I mean
we've been at this game now for about 10
years there's been a lack of a unifying
organization a center of gravity if you
will to bring the industry all together
and that's where dtcc comes in to this
process so we are looking at a
multifaceted approach to try to bring
the industry together one by rolling up
the products that Dan and his team um
are building so that is really looking
at the entire life cycle um of
tokenization so it's really the entire
life cycle uh where Dan and the team
have done some amazing things and he
always talks about its compliance first
which is really important in our
industry and also as part of dtcc right
we look after the safety and soundness
of the markets and we intend to do that
as we move forward with digital
infrastructure the second component is
really creating environment ments where
we can finally move away from these
individual one-offs proof of Concepts
and start to move into production and
then the third component is working
again with the industry um and the
fintech uh providers out there to build
what's called a tier one uh setup which
is resilient but the whole idea is to
really do for digital assets what we do
for uh traditional assets and and have a
resilient scalable and interoperable um
environment so that is what we're
striving to do we want to be the digital
financial markets of the future uh and
that is the strategy that we're pushing
forward
[Music]
on the impact is Broad but I'm going to
highlight three specific cases that we
think are really the the next few years
will be dominated by these cases the the
first is private markets so private
markets in in general are very
disjointed many private Market
transactions occur really managed by
spreadsheets in most cases and some
cases by systems that are disconnected
and uh dissimilar this makes liquidity
in private markets very difficult and
transactions that might involve even
lending or borrowing against assets are
virtually impossible on blockchain Rails
that really changes everything where the
full life cycle of private Market asset
can really be managed efficiently and
that will open things and really blend
private markets with public markets the
second case I think is is important is
product structuring there's a technology
and a relatively new approach in
blockchain which is the ability to take
a token and embed into the token a
wallet so the concept of an asset which
can own other assets or positions well
that's what product structuring is
really all about is taking for example a
long position and hedging creating a new
Financial instrument those can be
created very quickly in this new model
it also includes direct indexing so you
can take and put put a wrapper around an
indexing strategy and allow folks either
individually or as small groups to
effectively create own funds their tax
advantages it's more efficient wrapper
as you take those strategies and you'll
see a lot of innovation in products
thanks to this this power of blockchain
the third and maybe the most
consequential here in the short run is
the use and automation of collateral and
collateral management
processes most transactions are actually
repo transactions Securities lending
transactions uh margin transactions
actually those dominate the market
volume on a daily basis and if you can
automate the entire collateral
management flow and then automate these
individual processes what you free up is
instant settlement of these transactions
for financial institutions and the
impact of that is a massive release of
value that's locked in their balance
sheets even
intraday and that can have a a major
impact on the bank's efficiency and
performance on the order of millions of
dollars a day there's a substantial
driver there and once you open those
markets to tokenization and automation
everything else
[Music]
follows so as one famous Bostonian once
said the institutions are coming the
institutions are coming right and we're
starting to see progress uh where more
certainty in the market is helping
institutional um adoption such as the
approvals of fit 21 other instruments
both eth and Bitcoin uh spot ETFs those
have been super helpful in uh in pushing
the movement forward it just shows you
there's pinned up demand it is it is
pushing through there's a couple of
things that are a little bit different
about this this is the first time in our
history where we've seen actually retail
lead and institutional follow but uh the
certainty that we're getting right now
from the Regulatory and the legal
framework is helpful and we'll continue
uh hopefully to see that progress also
the use cases that Dan uh talked about
they they have a commod denominator here
is um they bring more efficiency into
the the process right we we know how to
manage collateral we know how to do all
these things firm like dtcc or most
middle and back offices have done
historically is really the bridge
between the inefficiencies of the
markets the front and the back office
this technology blockchain accentuated
by tokenization um helps uh free up
these processes create more efficiencies
both on the cost as well as on the
revenue side and also create capital
efficiencies all those are primed for
any institutional provider whether
you're investor or a provider of
services they've got to be attractive uh
to look at now the secret though is you
can't do uh the same old thing with new
technology right this is also an
invitation and opportunity to reimagine
and revisit your operating models your
processes and if you do that we will
hopefully see adoption we will see
volume and then these efficiencies uh
will be as as as simple was that um as
they pop up in their uh
[Music]
environment the growth of these these
markets really underscores what I think
everyone is seeing that by 2030 they're
anticipating on the order of $15
trillion do worth of assets on
blockchain Rails and far more
transactions per day based on on that
assets under management under blockchain
well having a financial Market
infrastructure that can handle those
assets that is that meets the highest
regulatory standards of a CMU of a
systemically important Financial market
utility that's a challenge so things
like being able to handle the scale of
us or even Global markets blockchain and
its current form blockchain
implementations can't handle that scale
uh we know that in that time frame
Quantum Computing is likely to be a
threat and we'll need postquantum
technologies in that time frame another
big uh shortcoming of blockchain markets
as they stand today is a lack of data
standards so their standardized
interfaces erc20 being a great example
of something that's transformed the way
that a simple wallet that you can
download can interact with any token
that's issued but the problem is there's
no standardization of the data so if you
were to attempt to find a token let's
say you're interested in in South
American mining interests there are a
bunch of tokens out there you can't find
them you don't know what they mean what
they represent so if you have this on
your balance sheets and you're trying to
understand your portfolio and risks
there is no standardized data so we're
introducing a mechanism for data
standardization that allows you to take
isda standards and and other mechanisms
so that you can look at blockchainbased
assets you can look at wallets and
understand what they mean and and
perform traditional risk management and
portfolio Management Solutions this will
open up Financial Market markets to the
kinds of uh Financial modeling that
large institutions expect in addition to
everything that Dan said those are the
big problems that need to be solved they
are a more pressing immediate problem um
and the one that we find the most is
people don't know where to start there
is still an overwhelming I don't know if
it's fear or intimidation about the
technology despite the fact it's been
around for quite a bit of time so
there's a lot of work that needs to be
done around education you also have a
lot of financial institutions that have
sunk billions in their technology so
telling them to throw it all away for
new digital rails that's uh that's a
hard pill to swallow as well so a lot of
the work that Dan and the team have done
has been to create these infrastructures
that actually can bring the old and the
new together what we're doing at dtcc is
also providing safe environments where
they can go in and experiment and
understand how that impacts their
operating models their business models
and be able with high confidence go to
their management teams or their boards
and try to put the the case of why they
should be looking at digital we know
digital is not the cure to the common
cold not everything's going to be
tokenized but whatever can be tokenized
should be tokenized and we would like to
be part of that support infrastructure
to allow them to better understand what
it is understand the financials
understand the risks and hopefully uh
make educated decisions as they move
forward so there's the short term that
we're dealing with in a lot of the
medium to longer term challenges that
Dan and the team are trying to resolve
[Music]
Ting's point is a good one that uh
interoperability this ability to to
bridge between Legacy systems and the
new blockchain rails is is a critical
enabler it's it's you shouldn't have to
make a choice to go to the digital world
and then never come back or to stay
where you are and a big part of that is
again making these Technologies
accessible and interoperable so they
have to meet the accounting risk
management strategies of of Institutions
they have to be easy if I have to teach
my mother how to use a wallet in order
to invest it's just not going to happen
practically and easily so a lot of the
technologies that we're building outs
that are being built across the industry
are designed to simplify make it easy
for folks to enter and what you see in
terms of interoperability is there's a
proliferation of ledgers what we expect
is innovation will continue in Ledger
Technologies for indefinitely in order
to be able to meet the scale
requirements that that we just mentioned
you'll see that ledger Technologies
there will be many this is why chain
Link's role is so very important is we
expect that there'll be many ledgers and
and there's a need to move value between
the ledgers and especially the need to
move data between ledgers so ultimately
to get to True consensus and remember
dtcc is the consensus model for us
markets we just happen to do it in now
t+1 ultimately to do it in t plus 0 that
means we need to get to Common meaning
when when transactions settle we all
have to know that they mean the same
thing and if we're Target is is near
instantaneous settlement then data has
to agree across all of these ledgers and
this is why our partnership with chain
link is so very important because this
allows us to write data once and have it
proliferate across all of the networks
to move value freely between whatever
the the best Ledger technology is of the
day so that we can meet the high volume
requirements that are coming and we
continue to innovate as Ledger
Technologies grow I see markets being
becoming unified so we have public
separated public and private markets we
have separated debt and and equity
instruments we have separated cash rails
and commodities rails and securities
transaction rails we have markets that
are separated by jurisdictions
globally blockchain makes it possible
for all of these rails to come together
and for us to have unified markets which
makes them much more accessible as as
needen mentioned individuals don't get
easy access globally to investment
opportunities and so by bringing all of
these marketplaces together making
transactions extremely efficient we're
able to get to to markets that are more
fair and more open in the
[Music]
future I dream of a of a world that is
totally open efficient accessible
uh democratized uh and that's what I
love about this technology it offers
goodness across the board whether it's
on the cost side the capital efficiency
side on the revenue side but it also
makes a lot of these sophisticated high
value Investments uh accessible to a lot
of people right uh which is something we
don't have that luxury Dan originally
talked about private markets being uh a
good use case today the the minimums to
enter these markets is pretty high
they're highly uh
expensive to to manage and run so all
all these um Technologies allow us to
truly democratize access uh to the best
uh investment Minds that are out there
and hopefully achieve um Financial um
Equity uh going through that but it also
allows us to as a as an industry we've
we've been if you will the bridge uh in
trying to um eliminate inefficiencies in
the market I think the technology right
now uh will will help us achieve that
and lastly I think the technology
becomes the trusted party uh which also
doesn't mean that U and that's really
important it doesn't mean that anybody
disappears from the ecosystem I think
our roles change whether you're whatever
whatever role you play um and I do
believe there's there is room for
everybody there's rooms for the fintex
there are rooms uh for intermediaries as
well as the banking institutions it's
just I think our roles will change and
um and at the end of the day I think the
end consumer is the winner here so
everything that we aspire to make sure
that U it's accessible it's safe it's
scalable it's re reliable I think these
digital rails allow us to do that
especially if we can also integrate it
with whatever doesn't tokenize and
remains on uh Legacy organization being
able to give that client uh the client
an amazing experience at the end of it
that's where I think uh our markets will
be heading so they'll be safe they'll be
secure they'll be compliant scalable
resilient um and accessible to all
[Music]
関連動画をさらに表示
XRP She Said Too Much They Didn't Want You To hear All Of This !
Chainlink's Strategic Position in Capital Markets in 2024 | Sergey Nazarov
Tokenized Assets U.S. Hearing🔥BlackRock vs Hillary🔥
What is DeFi in Crypto? 🧐 Decentralized Finance Explained! 🧠 (Ultimate Beginners’ Guide on DeFi📚)
The future of payment cards, digital wallets and tokenization with Paymentology | Converge Podcast
Centrifuge: Better technology for financial products
5.0 / 5 (0 votes)