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SWIFT signs MOU with seven CSDs to study blockchain in securities and post-trade processing

Thomas Zeeb, CEO, SIX Securities Services

SWIFT will work with seven central securities depositories (CSDs) to demonstrate how blockchain technology can be used in post-trade scenarios, such as corporate actions processing, including voting and proxy-voting.

They will investigate the types of new products that can be built using it, and how existing standards such as ISO 20022 can support it. Both SWIFT and the CSDs signed a Memorandum of Understanding (MOU) upon agreement of collaboration.

The aforementioned CSDs are Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate, but more names are expected to join this list in the near future.

Read more: Five CSDs migrate to T2S using SWIFT

The MOU includes the product requirements for an e-voting solution based on DLT that includes common standards (ISO 20022) and principles, as a way to bypass the cumbersome manual processes during securities processing.

“To ensure interoperability and smooth migration, it is crucial that new technologies support existing common standards such as ISO 20022,” said Stephen Lindsay, head of standards at SWIFT. “The promise of the technology on paper is great, but it is currently missing a key component around standardisation. There is clear value in re-using established business definitions and facilitating interoperability amongst DLT implementations, which this project will demonstrate.”

The MOU aims to foster collaboration between CSDs and DLT developers identifying, defining and developing additional use cases for DLT in a CSD environment and the post-trade landscape.

Read more: BNP Paribas Securities Services and Tata Consultancy Services partner to deliver asset servicing industry using blockchain technology

The group will also focus on creating and adapting common standards and principles for the use of DLT amongst CSDs and the financial industry, and promoting the adoption of those standards and principles to other parties, including regulators.

The International Securities Services Association (ISSA) recently endorsed the group and included it as part of a new work stream within the Association’s existing Working Group on DLT, giving this initiative greater industry visibility. It will publish the findings from the use case on digital assets in Q2.

“There is a lot of potential for DLT in securities processing and the work being led by the CSD working group on DLT is tackling a key challenge related to emerging technologies, which is a clear lack of standards,” added Thomas Zeeb, CEO, SIX Securities Services and chairman, ISSA. “As the industry evolves, DLT-specific standards such as ISO 20022, will provide a great foundation, in terms of both existing business content and approach.”

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