DTCC proves private blockchain could handle US equity market volumes

October 17, 2018
Chris Wheal

Depository Trust and Clearing Corporation (DTCC) has published the results of a study that show private blockchains are capable of scaling to meet the volumes of transactions demanded by the US equity market.

Post trade services company DTCC studies blockchain in US equity markets

DTCC, the post-trade services company, commissioned the study from Accenture, with additional support provided by private blockchain services provider R3 and tech services group Digital Asset.

Trading volumes

Its findings confirmed that distributed ledger technology (DLT) provided by a private blockchain could perform at levels necessary to process an entire day’s trading volume in the US equity market – even at peak rates.

This equates to around 115 million transactions per day – an average of 6,300 trades per second – for five continuous hours.

Open-source public blockchains had previously provided the only indication of what potential volumes DLT was capable of, and fell short of the required speeds.

Public vs private blockchain

Indeed, the major drawbacks of public blockchains are that the substantial amount of computational power and the consensus-driven protocols slow down the processing of transactions – in many cases only single- or double-digit transactions per second are possible.

In private blockchains, the consensus protocols that are governed by a multitude of blockchain validators, are replaced by a set of algorithm-driven rules put in place by the blockchain operator.

Market model

Accenture built a network of more than 170 nodes to model the financial ecosystem of the stock exchanges, market participants and broker-dealers supported by the DTCC in the post-trade environment.

“This project answered key questions and built serious confidence in blockchain’s ability to drive large scale transformation,” said David Treat, global blockchain lead at Accenture.

Murray Pozmanter (left), head of clearing agency services at DTCC, said: “We are excited to lead this important work to advance the performance capabilities of DLT and help create new possibilities for leveraging the technology more broadly across financial markets.”

He added: “As an early adopter of DLT, we are encouraged by the results of the study because they prove that the technology’s performance can scale to meet the needs of markets of different sizes and maturity.”

DTCC said that, so far, the study only tested basic functionality and that more work would be required to test resiliency, security and potential regulatory requirements.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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