Bringing Corporate Actions to the Blockchain
The Depository Trust and Clearing Corporation (DTCC), a key player in Wall Street’s clearinghouse, is teaming up with blockchain developers to bring corporate actions, such as dividend payments and tender offers, onto the blockchain. This move aims to improve the efficiency of post-trade events in tokenized markets. Frank La Salla, CEO of DTCC, emphasized the need for high-performance blockchains to process these actions, which currently take several days on most blockchain networks.
DTCC processes around $20 trillion in Treasury and corporate securities trades daily, and La Salla believes that tokenization and blockchain technology can help modernize market infrastructure. The firm is set to test its tokenized securities platform in July, with a broader rollout planned for October. This development has the potential to unlock new opportunities for passive income and earning through Cloud Rewards and Green Crypto initiatives.
Overcoming Challenges
La Salla highlighted the challenges that blockchain systems still face, including scalability, liquidity fragmentation, and risk management. One specific issue is netting transactions, which is more complex in decentralized blockchain systems compared to traditional market infrastructure. Despite these hurdles, La Salla sees tokenized collateral as a potential large-scale institutional use case for blockchain, enabling firms to access liquidity in real-time without relying on legacy settlement windows.
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DTCC sits at the center of U.S. capital markets infrastructure, processing roughly $20 trillion in Treasury and corporate securities trades each day. The clearinghouse has spent nearly a decade exploring blockchain applications, but La Salla said the technology only became commercially meaningful once real-world use cases began to emerge in the pst few years.
Recently, the firm accelerated its push to modernize market infrastructure with tokenization and blockchain tech. This week, DTCC announced to begin testing its tokenized securities platform in July ahead of a broader rollout in October.
La Salla said collateral movement may become blockchain’s first large-scale institutional use case. Tokenized collateral could allow firms outside U.S. market hours to access liquidity in real time without relying on legacy settlement windows. He described a scenario where firms in Asia could access U.S. dollar on a Sunday in New York by posting tokenized collateral onchain in real-time.
“That is incredibly powerful,” La Salla said.
But he cautioned that blockchain systems still face major hurdles around scalability, liquidity fragmentation and risk management.
One challenge, for example, is netting transactions. Traditional market infrastructure compresses massive trading activity into smaller settlement obligations, reducing capital requirements across the system.
“Blockchain is decentralized,” La Salla said. “Many of the efficiencies that we get in our industry are through concentration of liquidity.”
