US clearing house Depository Trust & Clearing Corporation ( DTCC ) and industry leaders will demonstrate a new digital collateral management platform, on April 23 during “The Great Collateral Experiment” live event, representing a diverse cross-section of financial market assets and participants.

This will be the first industry demonstration developed on the clearing house’s digital ecosystem that launched last October – DTCC Digital Launchpad. 

Collateral is an essential risk mitigation tool that helps support overall financial stability. But as the markets grow more complex and cost pressures rise, the DTTC says, the demand for high-quality collateral increases. Blockchains present a significant opportunity to streamline the flow of collateral across siloed infrastructure, unlocking major capital and operational efficiencies. 

The AppChain-based approach demonstrates the power of tokenized collateral management to:

• Increase the mobility and velocity of collateral movement globally
• Increase capital efficiencies and liquidity for all participants
• Facilitate the convergence of traditional and digital assets
• Enable an open digital liquidity ecosystem for market participants to deploy digital applications that enhance collateral operations.  

The collateral management platform is an application on the DTCC AppChain, built atop LF Decentralized Trust’s Besu blockchain. The DTCC AppChain offers greater control over privacy, security and data and uses DTCC ComposerX.

The clearing house, it states, is giving participants a robust digital financial infrastructure to help navigate the fragmented data landscape that spans traditional and digital networks. The platform leverages a scalable, industry-driven framework rooted in open architecture and common standards.

“Our goal is to highlight how we can enable real-world, institutional-grade digital collateral market infrastructure,” says Nadine Chakar, global head of DTCC Digital Assets. “This platform is unique in that we’ve created something that’s more open, flexible, dynamic and comprehensive than any previous digital collateral initiative.

“We plan to continue building on this collateral model, engaging with the industry and our regulators to develop the standard for tokenized collateral across global jurisdictions, working with the buy-side to give them more direct market access, and laying out the regulatory and legal path to implementation.”

Dan Doney, the company’s chief technology officer, adds: “Collateral mobility is the ‘killer app’ for institutional use of blockchain – we’ve pulled together a coalition of technologists and market participants to successfully showcase how the speed and openness of this technology can safely and reliably unlock liquidity in traditional markets at scale.

“By using smart contracts to automate the full range of collateral operations, we enable complex trade execution across markets in real-time at any time, even in volatile conditions.”