Indian technology vendor Tata Consultancy Services (TCS) has facilitated the world’s first cross-border securities settlement between two emerging markets central securities depositories (CSDs).
The settlement was carried out between the Moroccan CSD, Marcoclear, and the CSD of Kuwait, the Kuwait Clearing Company, using cash coins on the TCS BaNCS Network.
The BaNCS Network, powered by Quartz Blockchain, is a private permissioned blockchain ecosystem through which 450 TCS BaNCS participants across banking, market infrastructure, custody and insurance domains, can collaborate by connecting to a single ledger and accessing information and services on a real-time basis.
“The BaNCS Network has been created by TCS to leverage the power of blockchain to deliver exponential value from ecosystems, a part of TCS’ Business 4.0 vision,” said R Vivekanand, vice president and co-head, TCS Financial Solutions.
In the tests run by the two emerging markets CSDs, a set of equities and fixed income securities from both the Kuwaiti and Moroccan markets were created on the network, along with segregated accounts to hold the securities.
The cross-border settlement instructions for the securities were then matched and settled instantaneously on the ledger using Quartz’s Smart Solution for Cross-Border Settlements.
“Real-time cross-border settlement with cash coins reduces risks, costs and has the potential to create enhanced liquidity in markets in Middle East and Africa,” added Vivekanand.
Cash coins are a form of digital currency pegged to a fiat currency at a fixed market rate and are maintained on a private, permissioned blockchain network. This enables real-time delivery verses payment (DvP) settlement of cross-border securities transactions.
In 2018, TCS successfully tested a blockchain-based non-exchange trade settlement for the Canadian Depository of Securities (CDS).
The test was part of a larger market infrastructure transformation programme leveraging the TCS BaNCS for Market Infrastructure model, aimed at modernising depository, clearing and settlement services in Canada.