Pirum said it has successfully tested a distributed ledger technology (DLT) extension of its securities lending and repo post-trade solution.
This development would provide clients with an immutable, transparent, and distributable golden-record of their trades for reference, audit and other purposes, and builds on existing post-trade lifecycle workflow and automation, fed from real-time client books and record data integrations.
Pirum stated it is working with several technology stacks to model the stock loan and repo golden-record ledger and smart-contract lifecycle flows to benchmark features, performance, and interoperability.
“During multiple client and fintech working groups we explored the return on investment (ROI) case of DLT and debated the benefits, challenges and risks involved,” the firm said. “It became clear that the key challenges for post-trade DLT adoption are coordination, cost, risk management, capacity, performance, security and resilience.”
In parallel, Pirum conducted a data study encompassing trading data from multiple industry participants.
The results showed that match-rates were sometimes only around 87%, meaning up to 13% of transactions or lifecycle events would not reach the DLT layer without a human interaction.
Pirum added that clients who have fully adopted and embedded existing real-time post-trade lifecycle services are, however, achieving match and straight through processing (STP) rates of ~95%, further increasing to 99.8% once the full suite of services across vendors are rolled out and adopted.
“In the context of tokenised assets, the immediate benefit of DLT adoption is far clearer and Pirum are therefore already integrating and evolving quickly in this area,” the firm said.
“Pirum are also experimenting with how the benefits of DLT can be used today to solve existing industry challenges including standard settlement instruction (SSI) management to further improve settlement efficiency, reliability and reduce fails, penalties and unsecured credit risk.”