Canada’s equity settlement blockchain project reaches viability
Payments Canada, the Bank of Canada, TMX Group and Accenture have demonstrated that the instantaneous clearing and settlement of securities on blockchain is “feasible”.
Instantaneous clearing and settlement of securities on blockchain is “feasible”
According to the quartet, this shows for the first time that both central bank cash and assets can be tokenised to complete an instant, end-to-end equity settlement on distributed ledger technology (DLT).
Called Project Jasper, this initiative was launched in 2015 but faced some obstacles back in May 2016.
At that time, Carolyn Wilkins, senior deputy governor of the Bank of Canada, said: “The bottom line is that a stand-alone DLT wholesale system is unlikely to match the efficiency and net benefits of a centralised system.”
She added: “At its heart, there exists a fundamental inconsistency between a centralised wholesale interbank payment system and the decentralisation inherent in DLT.”
Now it’s moved on to Jasper III, a continuation of previous work launched in March 2016, and is a proof of concept that was delivered by Accenture, using R3’s Corda DLT platform. It is designed to explore the impact and potential benefits of DLT on broader Canadian financial market infrastructure.
“This proof of concept shows that it is possible to deliver payments in a way that has never been done before – by directly swapping cash from buyers to sellers, resulting in instant settlements,” says Gerry Gaetz, president and CEO of Payments Canada.
Previous phases of Project Jasper focused on the clearing and settlement of high-value interbank cash payments using DLT.
Phase III explores an integrated payments and securities infrastructure. The proof of concept allowed clearing and “delivery versus payment settlement immediately, demonstrating that it’s possible to complete post-trade settlement on a DLT platform”.
According to the gang, Jasper III is currently the “only proof of concept that maintains privacy for market participants and their transactions by giving only the parties involved in specific transactions the ability to view the transaction history, without providing the same visibility to other participants on-ledger”.
In a separate development, today (14 May), HSBC and ING Bank executed the “first” scalable trade finance transaction using R3’s blockchain for Cargill, an international food and agriculture conglomerate.
