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New DLT concept trialled for financial services industry

Proof of Concept for LedgerConnect Image

Bank-owned currency trading utility CLS and enterprise software giant IBM, have joined forces to foster an ecosystem for financial institutions.

The two companies have announced a collaboration on a proof of concept (PoC) for LedgerConnect − a distributed ledger technology (DLT) platform for the financial services industry.

LedgerConnect is a managed ‘app-store’ which will make it easier for banks to access DLT-based services for financial processes.

It has been designed to enable banks, buy and sell-side firms, FinTechs and software vendors to deploy, share and consume services hosted on a single, shared DLT network.

Barclays and Citi are among the nine financial institutions participating in the initiative which will allow them to access services in areas such as, but not limited to, know your customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.

By hosting these services on a single, enterprise-grade network, organisations can focus on business objectives rather than application development, enabling them to become more efficient and save money.

The idea for the shared network arose from the need for financial institutions increasingly work to implement DLT into their operations.
Capital markets are swamped with multiple systems performing the same business functions and with siloed pockets of data that require expensive reconciliation processes.

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.

Hence. LedgerConnect aims to solve this problem by providing a single shared and highly secured network on which multiple services can be deployed and consumed.

It 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.

The nine financial institutions participating in the PoC have selected services from a number of vendors including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems.

Operating on a private permission 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,

LedgerConnect is part of CLS’s strategy to explore how we can provide safe and robust solutions that create efficiencies and reduce the risk for a diverse range of firms operating in the financial markets. “We expect LedgerConnect to deliver enhanced efficiencies and economies of scale over single-purpose distributed ledger networks.”

Marie Wieck, general manager, IBM Blockchain, added:

Building on the success of CLSNet and leveraging the strong relationship CLS has with the world’s leading financial institutions, 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 plans to make the platform widely available to the industry.