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The Depository Trust & Clearing Corporation (DTCC) will roll out a new platform designed to support digital issuance, servicing and transfer of ownership for unlisted securities.
The Digital Securities Management (DSM) platform will enable digitisation of private market securities utilising both distributed and central infrastructure, drawing on a cloud-based environment to allow book-entry securities recordkeeping and support for digital assets by enabling issuers to create tokenised versions of a private security.
The project is currently in its production-build phase and DTCC expects to go live with the platform in early 2022, subject to regulatory approval.
The platform will initially support unlisted (ie pre-IPO) equities, but DTCC expects to expand this to other private market securities including funds, debt securities, real estate, loans and other private instruments.
DTCC indicates that this is the first case of an industry-wide solution that provides common market infrastructure and standards across private markets.
This represents the latest step in DTCC’s strategy to deliver standardisation, automation and efficiency to private markets, as outlined by its Project Whitney project.
The New York-based post trade infrastructure specialist has released further details of its ambitions in supporting digitisation of private market securities in a newly-published report, entitled Digital Securities Management: Bringing Private Markets Infrastructure into the 21st Century.
The platform is designed to be “blockchain agnostic”. DTCC indicates that DSM will initially interface with the Public Ethereum Network, but will incorporate other public and private blockchain technology according to customer and market demand.
The DSM platform is designed to support private securities across their full lifecycle and will, according to DTCC, deliver a range of benefits across the private market ecosystem.
This will include a reduction in operational costs achieved through standardisation and process automation, including use of securities identifiers. This will also offer gross settlement as early as T+1 and an electronic approvals process for transfer restrictions.
DTCC proposes that costs will be mutualised for non-differentiated services such as centralised stock record keeping.
Commenting on the development of the platform, Jennifer Peve, DTCC managing director and head of strategy and business development, says: “DSM is capable of transforming the private markets, unifying an increasingly fragmented space under a common infrastructure that can automate manual processes, reduce costs and risks, and open up more opportunities for investors.”
“DSM is the culmination of a hugely collaborative effort with our clients, industry representatives and other key stakeholders, whose feedback was critical in developing a solution to modernise, digitalise and ultimately transform the private market ecosystem,” says Peve.
Michael Bodson, DTCC president and CEO, says: “DTCC has a long history of innovating to make the global financial services industry more efficient, and we continue to explore new and emerging technologies to support the digitalisation and tokenisation of assets.
“The DSM platform offers a unique opportunity to implement new technology and streamline processes in the private markets while relying on the secure and resilient infrastructure that we have long provided for the public markets."
