Post-trade firms step up resources for DLT projects, but COVID-19 could wipe out gains made 

Investment into DLT increased 20% over the year, yet the operational pressures of the COVID-19 pandemic could set back the industry.

By Joe Parsons

Post-trade firms have increased investment resources devoted to distributed ledger technology (DLT) projects, according to a joint industry survey, but the impact of the COVID-19 pandemic could delay many of the initiatives currently in development.  

According to findings from The Value Exchange, the International Securities Services Association (ISSA), Accenture, Digital Asset and Global Custodian, 79% of firms have resources dedicated to DLT projects, yet just 1.6% said they are fully live with this technology.   

The global survey was based on findings from 140 financial institutions including banks, brokers, custodians, investors and service providers. 

Today we are in between two important phases of adoption: conceptual validation has happened, but we have not reached large scale adoption. We have no shortage of industry specialists who see the potential applications of these technologies in our ecosystem: yet we also face large numbers of professionals who are sceptical about how they could ever be used ‘in anger’,” the report said. 

The survey showed almost half of firms are still in the research and planning phase of their DLT projects, and only 28% are developing proof of concepts. These are also being led by the innovation and product management teams of these firms, as opposed to operations or compliance.  

Furthermore, while investment into DLT increased 20% over the year, the operational pressures of the COVID-19 pandemic is set to have a significant impact on these projects, with resources for DLT expected to be flat for 2020.  

Technology projects which securities services firms have spent the best part of a decade exploring therefore could be put on hold despite widespread agreement on the importance of such projects.

In March, the Australian Securities Exchange (ASX) confirmed a delay for the replacement of its CHESS equities clearing and settlement platform using DLT due to the uncertainty created by the COVID-19 pandemic.   

ASX had planned to go live with a new DLT-based post-trade platform in April 2021. The exchange has now launched a consultation in June with the securities industry to agree on a new go live date.