After seven years of investment and research, Depository Trust & Clearing Corp. (DTCC) has announced its Project Ion is in production, handling real cash and stocks and generating a respectable 100,000-160,000 equity transactions daily using distributed ledger technology (DLT), similar to the public blockchains that underlie cryptocurrencies like bitcoin and ether. The company’s August 22 announcement and resulting media coverage made it sound as if the future of Project Ion were a fait accompli. But while it is tempting to think that a systemically important financial market utility that processes 2.3 quadrillion securities annually is in the driver’s seat of its own projects, looks can be deceiving.
Through an exclusive interview with the DTCC, Forbes captured a backstory that suggests future DLT implementations are more conditional than widely thought, with large custodian banks like JPMorgan Chase, BNY Mellon and State Street and their clients holding significant sway over the future of a project that they will largely bankroll, should they decide to let it proceed at all. What do these banks want? Banks operate in the tightly regulated world of Basel III, which requires those that take on greater risks (i.e., Wall Street investment banks) to keep a greater amount of capital on reserve. Consequently, the largest banks have a common and clear agenda despite competing with each other for market share:
The question is whether the Project Ion priorities of these major banks collide with those of their customers.
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