Blockchain Can Settle US Equity Market Daily Trading Volumes – Report

Distributed ledger technology could support more than 100 million transactions per day, a five-month test has shown.

Blockchain has the capability to offer settlement services for daily trading volumes in the United States equity market, according to a report that the Depository Trust & Clearing Corporation (DTCC) published Tuesday. The company, which is one of the leading global providers of post-trade market infrastructure, ordered the analysis to the multinational consultancy Accenture, and also worked with blockchain companies Digital Asset (DA) and R3 Corda.

The DTCC study covered nineteen weeks and used private commercial blockchains. The results showed that distributed ledger technology (DLT) could support entire trading day’s volume including at peak rates when the activity equates to 115,000,000 daily transactions or 6,300 trades per second for five continuous hours. Currently, public blockchains operate at single or double-digit per second performance, DTCC claimed, but the Accenture analysis gave additional data about scalability.

“Accenture built a network of more than 170 nodes to model the financial ecosystem of exchanges, market participants and broker/dealers supported by DTCC. The prototypes were designed to test the capture of matched equities trades from exchange DLT nodes, novation of those trades with DTCC acting as the central counterparty (CCP) to maintain trading anonymity on the ledger, creation of netted obligations and settlement of the trades. The test environment for this study was set up in the cloud,” DTCC said in its statement.

The study’s aim was only to provide information about blockchain scalability, and it did not analyze other concerns in implementing DLT including security and resilience, as well as meeting operational, legal, and regulatory requirements.

“This project answered key questions and built serious confidence in blockchain’s ability to drive large-scale transformation,” David Treat, Managing Director, Global Blockchain Lead, Accenture explained.

Scalability is one of the significant blockchain implementation problems for the financial sector and for mass adoption of cryptocurrencies. In June, Bank of International Settlement (BIS) said that blockchain limited cryptos widespread usage as DLT could not scale with the demand.