DLT’s Value is the Bottom Line at Sibos 2018

By Paul Fullam, ISITC Board Member and Executive Sponsor of Corporate Actions Working Group, Senior Business Consultant at FIS

At the end of October, I joined over 7,500 industry professionals in Sydney, Australia to attend and present at Sibos 2018. The excitement in the room was palpable and all of the major banks and software providers were there to contribute to the conversations, debates, and prognostications on what lies ahead. Although I was at my company’s booth alongside the 165 other exhibitors and didn’t have a chance to sit in on all of the sessions, one takeaway was clear:

Distributed ledger technology (DLT) is on its way to becoming a reality in financial services

“Enabling the digital economy” was the theme that ran across the four-day conference, with blockchain and DLT at the center of many conversations about the future of the industry. One of the lectures, “The Blockchain Journey”, checked in on how DLT is progressing in financial services and weighed the pros and cons of the technology. On one hand, companies wanted to protect their trade secrets and were nervous that their clients’ or buyers’ data would be vulnerable. On the other, it would be highly useful for reconciliation and would provide one governance structure to streamline operations.

It seems to be just a matter of time before the pros outweigh the cons. Something that struck me throughout these conversations was that the buzz around DLT’s value in financial services is becoming less about hype and more about specific use cases in the industry. The Australian Stock Exchange (ASX) announced that it will streamline reconciliation for Equity Post Trade Services by replacing CHESS with DLT developed by Digital Asset, which will be on a private, permissioned ledger that will only allow licensed participants to access the system. The Hong Kong Stock Exchange (HKEX) has also announced that it is working with Digital Asset to develop a blockchain post-trade allocation and processing platform, which was a major push and another sign that the technology is on its way to becoming more widely accepted. The U.S. continues to make strides as well, highlighted by DTCC’s 19-week research project working alongside the likes of Accenture, Digital Asset, and R3 to build a prototype of a U.S. equities clearing and settlement system using DLT.

I’ll admit, I was skeptical of the concept of using blockchain in my work in corporate actions. However, after seeing concrete examples of how it can streamline financial services operations, my outlook is much more optimistic. Moving forward, I’ll be interested to see how these use cases play out and what other projects emerge. The wide ranging potential of DLT’s impact on our industry means it will be a topic of interest for the months and years to come at ISITC, and we look forward to keeping our membership informed along the way.